Metra Annual Report 1999...METRA 1999METRA 1999 5 Highlights • Metra’s Sanitec holding to below...

A n n u a l R e p o r t9999

2 METRA 1999

Metra CorporationJohn Stenbergin ranta 2P.O. Box 230FIN-00101 HELSINKIFinlandtel. +358 9 70951fax +358 9 762 278Internet: www.metra.fie-mail: [email protected]

Wärtsilä NSD CorporationJohn Stenbergin ranta 2P.O. Box 196FIN-00531 HELSINKIFinlandtel. +358 9 7095 600fax +358 9 7095 700Internet: www.wartsila-nsd.come-mail: [email protected]

Imatra Steel Oy AbJohn Stenbergin ranta 2P.O. Box 790FIN-00101 HELSINKIFinlandtel. +358 9 7095 300fax +358 9 7731 080Internet: www.imatrasteel.come-mail: [email protected]

Sanitec CorporationJohn Stenbergin ranta 2P.O. Box 447FIN-00101 HELSINKIFinlandtel. +358 9 7095 400fax +358 9 7731 207Internet: www.sanitec.come-mail: [email protected]

3 Information for Shareholders

4 Metra in Brief

6 President’s Review

8 Five Years in Figures

9 Shares and Shareholders

14 Review by the Boardof Directors

19 Group and Parent CompanyFinancial Statements

23 Accounting Principles

25 Notes to theFinancial Statements

37 Proposal of the Board

38 Auditors´ Report

39 Calculation ofFinancial Ratios

40 Financial Risk Management

41 Business Environment

43 Human Resources

44 Wärtsilä NSD

50 Imatra Steel

53 Sanitec

54 Assa Abloy

54 Metra Real Estate

55 Corporate Board and Management

57 Main Releases 1999

59 Financial Analysts

AddressesContents

2 METRA 1999

METRA 1999 3

Information for Shareholders

ANNUAL GENERAL MEETINGThe Annual General Meeting of Me-tra Corporation will take place inthe Congress Wing of the HelsinkiFair Centre on Thursday 23 March2000, beginning at 4 p.m.

Shareholders who have regis-tered themselves no later than 18March 2000 in the Company’s share-holder register maintained by theFinnish Central Securities Deposi-tory Ltd may attend the AGM.

Shareholders whose shares havenot been transferred to the book-entry securities system may alsoattend the AGM on condition thatsuch shareholders were registered inthe Company’s shareholder registerbefore 26 February 1993. In such acase, shareholders must present atthe AGM their share certificates orother evidence that their share-holding rights have not been trans-ferred to the book-entry securitiessystem.

Shareholders wishing to attendthe AGM must notify the Companyby 4 p.m. on 20 March 2000 eitherby letter addressed to

Metra CorporationShare RegisterP.O. Box 230FIN-00101 HelsinkiFinland

or by telephone, +358-9-7095 295Mrs Aila Aho.

Letters authorizing a proxy to exer-cise a shareholder’s voting right atthe AGM should be sent to theCompany before the notification pe-riod expires.

PAYMENT OF DIVIDENDThe Board of Directors will proposeto the Annual General Meeting thata dividend of EUR 0.50 (FIM 2.97)per share be paid on the 1999 finan-cial period.

An extra dividend of EUR 2.35(FIM 13.97) per share will also beproposed to the AGM, principally inthe form of Sanitec Corporationshares.

The record date for dividend pay-ment is 28 March 2000, and thedividend payment date is 7 April2000, should the Board’s proposal beapproved. For technical reasons divi-dends will be paid into shareholders’accounts on the following bankingday, 10 April 2000.

Shareholders cannot be paid adividend until they have transferredtheir shares to the book-entry secu-rities system.

The extra dividend will be paidonly in cash to such shareholderswhose shares are not registered intheir book-entry account on therecord date.

ANNUAL REPORT 1999This Annual Report is also availablein Finnish and Swedish. It is alsoavailable on Metra’s Internet site,www.metra.fi.

Wärtsilä NSD publishes itsAnnual Report in English andImatra Steel in English and Finnish.Sanitec’s Annual Report is availablein English, Finnish and Swedish.

INTERIM REPORTS 2000Metra Corporation will publish In-terim Reports on its financial per-formance during 2000 as follows:

January – March 11 May 2000January – June 9 August 2000January – September 9 Nov. 2000

These Interim Reports are publishedin English, Finnish and Swedish onMetra’s Internet site. Interim Re-ports will be sent by post on request.

Interim Report orders:tel. +358-9-70951 orInternet: www.metra.fi

STOCK EXCHANGE RELEASES:Metra´s Stock Exchange releases areavailable in English, Finnish andSwedish on Metra´s Internet site,www.metra.fi

METRA 1999 3

4 METRA 19994 METRA 1999

Metra in Brief

Metra is an industrial group withWärtsilä NSD as its core division.Imatra Steel is its other industrialdivision. Metra also has significantholdings in the listed companiesSanitec and Assa Abloy. Metra in-tends to reduce its holding in Sani-tec to below 50%. In support of thisaim Metra’s Board of Directors pro-poses to distribute an extra dividendin the form of Sanitec shares inspring 2000.

Wärtsilä NSDPower for land and seaWärtsilä NSD is Metra’s core divi-sion. Wärtsilä NSD is a global engi-neering group providing completesolutions for power generation andmarine propulsion. The companydesigns, manufactures, licenses,sells and services Wärtsilä andSulzer engines with unit outputs of500-66,000 kW, and installationsbased on them. The engines can berun on heavy fuel oil, light fuel oil,gas and new fuels such asOrimulsion®.

Net sales: EUR 1,896.6 million

Operating loss: EUR –28.5 million

Number of employees: 8,257

Imatra SteelEngineering steels for demandingcustomersImatra Steel, Metra’s other industrialdivision, produces special enginee-ring steels for automotive and me-chanical engineering companies inEurope. Its products include round,square and flat bars, forged engineand front axle components, leafsprings and tubular stabilizer bars.

Net sales: EUR 173.0 million

Operating profit: EUR 10.8 million


SanitecThe bathroom at its bestSanitec is one of the leading bath-room product companies in Europe.It is also active in Asia. Sanitec’sbrands include Albatros, Allia, Ido,Ifö, Keramag, Kolo, Porsgrund, Pozzi-Ginori, Revita, Scandispa, Sphinx,Koralle, Leda and Evac. Sanitec islisted on the Helsinki Exchanges.

Net sales: EUR 630.0 million

Operating profit: EUR 80.6 million


Assa AbloyA global locking groupAssa Abloy is the world’s leadinglocks and locking group. It is listedon the Stockholm Stock Exchange.

Net sales: EUR 1,170.5 million1

Operating profit: EUR 135.9 million2


1 Not included in Metra’s financial statements2 Metra’s operating profit includes its share of AssaAbloy’s profit as an associated company, EUR 17.8million.

Group structure, percentages are Metra’s holdings.

NET SALES BY DIVISION1999

Wärtsilä NSD 70.3%Imatra Steel 6.4%Sanitec 23.3%

100%

100%

21%

64%=><50%

METRA 1999 5METRA 1999 5

Highlights• Metra’s Sanitec holding to below

50% in spring 2000.• Wärtsilä NSD to become a

100%-owned subsidiary, role asMetra’s core divisionstrengthens.

• Metra’s 1999 result clearly up onthe previous year.

• Wärtsilä NSD’s result improvedsubstantially, but still a loss.

• Cummins Wärtsilä joint venturesplit up between the owners.

• Sanitec listed on the HelsinkiExchanges.

• Sanitec acquired SphinxGustavsberg.

StrategyAfter Metra’s holding in Sanitec fallsto below 50%, Metra will be an en-gineering group whose core divisionis Wärtsilä NSD and its other divi-sion is Imatra Steel. Assa Abloy andSanitec are valuable holdings whichreinforce the Group’s financialstanding.

Metra’s main business, WärtsiläNSD, is the world’s leading manu-facturer of medium-speed diesel andgas engines and a major supplier oflow-speed diesel engines.

Wärtsilä NSD’s strategic goal is tobe a global supplier of completepower solutions and marine propul-sion systems along with comprehen-sive operations and maintenanceservices.

The focus of Wärtsilä NSD’sR&D activities is on environmen-tally friendly performance-enhanc-ing solutions that serve the goalsand needs of its customers.

KEY FIGURESEUR mill. 1997 1998 1-3/1999 PF 1-6/1999 PF 1-9/1999 PF 1999

Net sales 2,572.8 2,602.6 663.6 1,327.2 1,931.2 2,700.0Operating profit 117.1 87.6 24.4 48.9 191.2 272.7Profit before extraordinary items 66.3 44.9 15.2 30.4 160.6 237.0Profit for the financial period 41.1 21.7 9.3 18.7 99.2 130.1Balance sheet total 2,574.9 2,581.5 2.785.1 2,796.9 2,867.5 2,971.2Interest-bearing liabilities, gross 796.2 686.8 897.0 894.5 762.6 794.3Convertible subordinated debentures 117.4 117.2 117.2 117.2 117.2 117.2Cash and bank balances 122.5 83.9 105.1 108.1 108.9 110.3Metra published four-month and eight-month interim reports during 1999. The quarterly figures are proforma figures. In 2000 Metra will report quarterly.

6 METRA 1999

Georg Ehrnrooth

President and CEO

6 METRA 1999

Metra experienced a series of majorchanges during 1999. Sanitec waslisted on the Helsinki Exchangesand became an independent com-pany with Metra being a majorshareholder. Our largest industrialdivision, Wärtsilä NSD, was heavilyrestructured to raise operational effi-ciency and streamline manufactur-ing capacity to prevailing marketconditions.

Our consolidated profit beforeextraordinary items improved sub-stantially from EUR 44.9 million toEUR 237.0 million. The major partof this increase, EUR 174.5 million,was derived from non-recurringitems, principally from the sale ofshares in Sanitec and Assa Abloy.The corresponding net impact fromnon-recurring items last year wasEUR 35.3 million. Hence, our resultof operations improved by EUR 52.9million. Most of this, EUR 50.5 mil-lion, was generated by WärtsiläNSD. Despite major improvementsin several sectors the company’s re-sult before non-recurring expensesand extraordinary items, however,remained a loss of EUR 26.4 million.The improvement was the result ofhigher margins for power plants, ex-pansion of the service business andreduced costs. In the Netherlandsthe power plant business was par-ticularly unprofitable owing to a loworder intake and high costs. TheCummins Wärtsilä joint venture,likewise, reported another heavyloss, EUR 27.1 million, which de-pressed our result.

We placed top priority on ad-dressing these problems during1999. We acquired the remaining40% of the Dutch company and atthe same time reorganized its opera-tions. The decision was also made tosplit the Cummins Wärtsilä joint

venture between the owners.Wärtsilä NSD takes over the largerengines which are manufactured inFrance and complement our otherproducts. Cummins will have thesmaller engine types which wellmatch their product range manufac-tured in England. We will also takethis opportunity to rationalize andconcentrate our French operations.We entered a provision of EUR 20million in the 1999 accounts tocover the aggregate costs of this re-structuring. These actions will con-siderably improve the performanceof our Dutch operation and the partof Cummins Wärtsilä activity thatis now our responsibility.

Delivery volumes in the steelmarkets rose during the autumn butprices and volumes developedweakly at the start of the year. Con-sequently Imatra Steel’s resultdeteriorated but it remained never-theless at a good level compared toother companies in the sector.

Sanitec continued its strongdevelopment during the yearand the acquisition of Sphinxconsiderably strengthened itsmarket position.

Sanitec’s listing during 1999 is alogical step in Metra’s strategy tocreate strong companies concentrat-ing on their own core expertise.Metra offered its shareholders thepre-emptive right to subscribe forSanitec shares in connection withthe Initial Public Offering. Later inthe year we also distributed an addi-tional dividend in the form ofSanitec shares and announced ourintention to do the same during2000. In this way we wish to offerMetra shareholders the opportunityto participate in the positive devel-opment which I believe Sanitec canlook forward to.

Dear shareholders

President’s Review


Our stake in Assa Abloy has beenreduced from 25.0 to 21.4%. Despitethis, the market value of our holdingrose from EUR 580 million at thestart of the year to over EUR 900million.

In February 2000 we reachedagreement on Metra’s acquisition ofthe 15.4% of the Wärtsilä NSDshares held by Fincantieri. Whencompleted, this transaction willmake Wärtsilä NSD a wholly ownedsubsidiary of Metra.

Taken together, all these changeshave refocused Metra into an engi-neering group with significant hold-ings in Sanitec and Assa Abloy. Inthe future we will continue to con-centrate on further strengtheningWärtsilä NSD’s position as theworld’s leading manufacturer of ma-rine propulsion systems and a lead-ing provider of diesel and gas powerplants. At the same time we willincrease our resources in order toexpand our operations and mainte-nance services.

Wärtsilä NSD now stands on a firmfoundation thanks to the action wehave taken, and resolved to take,and the strategy we have adopted.Project-based business operations, ofcourse, have their own risks associ-ated with new and existing orders.Nonetheless, I am confident that theprovisions we have made nowmatch the current situation. Inother words, Wärtsilä NSD is nowfully equipped to perform profitably,which in turn will raise its corpo-rate value as a world leader in itsfield. Our holdings in Sanitec andAssa Abloy, in which we exercise anactive ownership role, will contrib-ute financial strength and flexibilityto the Group.

My sincere thanks are due to ourshareholders, customers and person-nel for the confidence you placed inour company during the year.

February 2000

Georg EhrnroothPresident and CEO

8 METRA 19998 METRA 1999

Five Years in Figures

EUR million 1999 1998 1997 1996 1995

Net sales 2,700.0 2,602.6 2,572.8 1,961.0 1,785.7 of which outside Finland % 95.2 95.5 95.1 95.8 94.0Exports from Finland 1,008.1 972.4 890.1 798.4 684.2Personnel on average 15,551 13,766 13,704 11,986 11,714 of which in Finland 3,807 3,867 3,701 3,603 3,679Orderbook, Wärtsilä NSD 1,314.9 1,210.2 1,177.0 791.7 824.1

From the income statementDepreciation and writedowns 112.9 110.5 95.2 76.9 76.0Share of profits/losses in associated companies –10.1 –40.5 –13.6 –3.7 2.5Operating profit 272.7 87.6 117.1 182.0 168.2 as a percentage of net sales % 10.1 3.4 4.6 9.3 9.4Net financial items –35.7 –42.7 –50.8 –31.6 –34.5 as a percentage of net sales % –1.3 –1.7 –2.0 –1.6 –1.9Profit before extraordinary items 237.0 44.9 66.3 150.4 133.7 as a percentage of net sales % 8.8 1.7 2.6 7.7 7.5Profit before taxes 234.5 41.4 66.1 155.9 124.6 as a percentage of net sales % 8.7 1.6 2.6 8.0 7.0Profit for the financial year 130.1 21.7 41.0 121.8 80.6 as a percentage of net sales % 4.8 0.8 1.6 6.2 4.5

From the balance sheetFixed assets 1,217.4 964.6 1,044.5 864.7 809.8Current assets Inventories 667.7 679.8 588.7 460.7 437.5 Receivables 975.8 853.2 819.2 642.5 614.4 Cash and bank balances 110.3 83.9 122.4 86.8 75.5Shareholders’ equity 826.5 742.6 772.0 730.3 645.2Minority interests 180.4 57.8 88.0 32.0 30.4Preferred capital notes 78.0 73.3Provisions 173.4 102.8 96.9 80.6 79.9Interest-bearing liabilities 794.3 686.8 796.2 491.3 460.0Non interest-bearing liabilities 996.6 991.4 821.8 642.5 648.2Balance sheet total 2,971.2 2,581.5 2,574.8 2,054.6 1,937.0Gross capital expenditure 263.8 163.7 282.6 223.9 187.2 as a percentage of net sales % 9.8 6.3 11.0 11.4 10.5Research and development expenses 86.9 86.6 93.5 57.4 52.1 as a percentage of net sales % 3.2 3.3 3.6 2.9 2.9Dividends paid for the financial year 27.1 20.1 24.9 24.9 24.9 Supplementary dividend 127.4 64.0 13.6Dividends total 154.51 84.1 24.9 38.5 24.9

Financial ratiosEarnings per share (EPS) euro 2.43 0.45 0.92 1.90 1.66Dividend per share euro 2.851 1.55 0.46 0.71 0.46Payout ratio % 117.31 344.4 50.4 37.5 27.8Interest coverage2 4.8 2.9 2.9 4.2 3.9Return on investment (ROI)2 % 20.1 9.6 10.0 17.4 16.9Return on equity (ROE) % 18.0 –0.4 6.7 17.6 17.1Solvency ratio 13 % 31.4 28.3 30.1 32.1 30.0Solvency ratio 2 % 35.5 33.2 35.0 38.0 36.4Net Gearing 13 0.90 1.05 1.07 0.93 1.06Net Gearing 2 0.68 0.75 0.78 0.63 0.70Equity per share euro 13.09 11.60 12.11 11.44 9.751 Proposal of the Board of Directors. Additional dividend will be paid in Sanitec shares. Financial ratios calculated from total amount of dividend.2 The change in accounting practice in the Group’s financing company applying to a portion of foreign currency forward contracts applies to the financial ratios

from 1998 onwards.3 Please refer to the Calculation of Financial Ratios on page 39.


OWNERSHIP STRUCTUREACCORDING TO SHARES HELD

Private corporations 21.7%Banks and insurance companies 14.4%Public sector entities 13.7%Non-profitorganizations 13.7%Households 20.3%Outside Finland ornominee register 16.1%

OWNERSHIP STRUCTUREACCORDING TO VOTES HELD

Private corporations 29.4%Banks and insurance companies 16.1%Public sector entities 12.0%Non-profitorganizations 15.7%Households 19.1%Outside Finland ornominee register 7.5%

Shares and Shareholders

Metra Corporation’s shares are listedon the main list of Helsinki Ex-changes. The shares are also tradedon the SEAQ International (StockExchange Automatic Quotation)system on the London Stock Ex-change.

The share capital of Metra Cor-poration is minimum EUR 87.5 mil-lion and maximum EUR 350 mil-lion. Within these limits the sharecapital may be raised or loweredwithout amending the Articles ofAssociation. The Annual GeneralMeeting on 25 March 1999 decidedto restate the Company’s share capi-tal in euros. This was done througha EUR 7,384,210.33 bonus issue inwhich the nominal value of theshares was raised to the nearestquarter of a euro, i.e. to EUR 3.50.The Company’s paid-up and regis-tered share capital is EUR189,700,861. Series A shares carry10 votes and Series B shares 1 voteat general shareholders’ meetings.All shares carry equal dividendrights. There are altogether54,200,246 shares in all: 13,935,104A shares and 40,265,142 B shares.

Convertible subordinated deben-tures and bonds with warrants formanagement

In March 1994 the Board floatedtwo convertible capital notes issues,each of the same amount and to-gether totalling FIM 700 million(EUR 117.7 million). One is convert-ible into Series A and Series Bshares, and the other into Series Bshares. Altogether 8,436 Series Ashares and 12,284 Series B shareshad been converted by 31 December1999, representing EUR 0.5 million(FIM 2.9 million) of the loan princi-pal. The calculated conversion pricewas EUR 21.56/share.

The Company also issued bondswith warrants for a nominal value of

FIM 180,000 (EUR 30,274) to Com-pany executives based on the au-thorization of the 1996 AGM. Theright to subscribe for shares beganon 1 September 1996 and ends on 2May 2003. The subscription price isEUR 15.84. The bonds were sub-scribed by 34 members of corporateand division management. Alto-gether 9,600 Series B shares havebeen subscribed, based on this issue(0.02 % of the shares and 0.005 % ofthe voting rights). The Group has noother personnel incentive schemesbased on shares.

Conversions and subscriptionsduring 1999 raised Metra Group’sshare capital by EUR 2,849. Thenumber of A shares rose by 407 andthe number of B shares by 407, mak-ing a total of 814 shares and 4,477voting rights.

Management holdingsThe members of the Board of Direc-tors, the CEO and the corporationsunder their control own altogether1,107,654 Metra Corporation shares,which represent 2.04 % of the stockand 3.17 % of the voting rights. Fur-thermore, the members of the Boardof Directors, the CEO and the corpo-rations under their control own alto-gether convertible subordinated de-bentures totalling FIM 20,390,000(EUR 3,429,352), i.e. 2.92 % of theprincipal. If the conversion rightswere exercised in full, this wouldincrease their holding by 159,042shares, representing 0.29 % of thecurrent stock and 0.41 % of the vot-ing rights. The CEO also owns 41warrants, based on the 1996 bondwith warrants, which, if exchangedfor shares, would increase hisshareholding by at most 49,200shares, i.e. by 0.09 % of the Compa-ny’s current stock and 0.03 % of thevoting rights.

SHARE INFORMATIONSeries A Series B

Share lot 100 100Votes/share 10 1

TaxationEUR1 12.96 12.87FIM1 77.06 76.521 Value per share in 1999.

10 METRA 199910 METRA 1999


Insider guidelinesOn 28 October 1999 the HelsinkiExchanges approved new guidelinesfor insiders in listed companies. Me-tra’s Board of Directors decided on15 February 2000 to adopt these in-sider guidelines from 1 March 2000.

Proposals to the Annual GeneralMeetingThe Board of Directors will proposeto the AGM on 23 March 2000 that,in addition to the dividend of EUR0.50 (FIM 2.97) distributed on thefinancial year ended 31 December1999, an extra dividend of EUR 2.35(FIM 13.97) per share, totallingEUR 127,370,578.10 (FIM757,311,067.33), be distributed inthe form of Sanitec Corporationshares. However, those shareholderswhose holding of series A or series Bdoes not exceed 99 shares in an indi-vidual book-entry account on therecord date for dividend paymentwill to this extent be paid the divi-dend in cash. The number of sharesdistributed as dividend will be cal-culated from the average price of theSanitec Corporation share on theHelsinki Exchanges on the dividendpayment date. Metra will pay thecapital transfer tax due on the divi-dend payment. The other terms and

conditions of the dividend distribu-tion are described in the Board’s pro-posal.

With respect to the extra divi-dend distribution, the Board willpropose to the AGM that the con-version rate of the 1994 convertibledebentures and the subscriptionprice of the Metra Series B share un-der the warrants attached to the1996 bond with warrants be changedcorresponding to the amount of ex-tra dividend.

Furthermore, the Board proposesthat the AGM authorizes it for oneyear to repurchase the Company’sown shares in public trading on theHelsinki Exchanges at the prevailingmarket price and other than in pro-portion to the holdings of sharehold-ers. At most 696,755 A shares and atmost 2,013,257 B shares may be sorepurchased. The authorization re-quested by the Board would also in-clude the right to dispose of thecompany’s shares at a price no lowerthan the quoted price on the Hel-sinki Exchanges, disapplying share-holders’ pre-emptive subscriptionrights.

CHANGE IN THE SHARE CAPITAL SERIES A SERIES B TOTALNumber of shares % Number of votes % Shares % Votes % Shares Votes

Shares/votes 31.12.98 13,934,697 25.7 139,346,970 77.6 40,264,735 74.3 40,264,735 22.4 54,199,432 179,611,705 debentures converted 407 4,070 407 407 814 4,477 bonds with warrants subscribed - - - - - -Total 31.12.1999 13,935,104 25.7 139,351,040 77.6 40,265,142 74.3 40,265,142 22.4 54,200,246 179,616,182

DILUTION EFFECTS OF THE CONVERTIBLE SUBORDINATED DEBENTURES AND BONDS WITH WARRANTS ON THE SHARE CAPITALNumber of shares Share capital Votes Conversion/Subscription terms

% EUR % Price Time

Conv. subord. debentures +5,159,280 +9.52 +18,057,480 +9.32 21.56 2.1.-30.11. annuallyBonds with warrants +206,400 +0.38 +722,400 +0.11 15.84 2.1.-30.11. until 2.5.2003Total +5,365,680 +9.9 +18,779,880 +9.43Number of Metra shares 59,565,926 and number of votes 198,396,062, if all conversion and subscribtion rights are exercited.

Formulas for calculating thefinancial ratios are given onpage 39.

Metra Corporation, domicileHelsinki, was entered in theTrade Register on 16 January1991. Metra shares weretransferred to the book-entrysecurities system in February1993.

The share prices before 1999have been converted into eurousing the official exchangerate: 1 euro = FIM 5.94573.

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METRA 1999 11METRA 1999 11

METRA SHARES ON THE HELSINKI EXCHANGES1999 1998 1997 1996 1995

Trading volume EUR mill.Series A 17.3 44.8 65.2 56.3 104.6Series B 310.0 474.1 403.4 256.5 207.5Total 327.3 518.9 468.6 312.8 312.1

Number traded 1.000Series A 924 2,018 2,611 2,976 7,294Series B 16,825 20,748 16,255 13,980 14,318Total 17,749 22,766 18,866 16,956 21,612

Stock turnover %Series A 6.6 14.5 18.8 10.7 26.2Series B 41.8 51.7 40.6 53.7 55.0Total 32.7 42.1 35.0 31.5 40.1

Average share price EURSeries A 18.69 22.19 24.95 18.92 14.38Series B 18.43 22.86 24.86 18.33 14.46

Trading low/high EURSeries A low 14.60 12.61 20.18 14.46 11.60

high 23.75 32.96 32.96 23.46 17.41Series B low 13.71 12.78 19.88 14.30 11.35

high 24.00 33.30 32.80 23.46 17.66Share price at year end EUR

Series A 18.20 15.09 21.70 21.78 15.05Series B 18.50 14.80 21.53 21.70 15.05

Year end marketcapitalization EUR mill. 999 806 1,163 1,166 811

KEY FIGURES FOR METRA SHARES1999 1998 1997 1996 1995

Earnings per share (EPS) EUR 2.43 0.45 0.92 1.90 1.66Diluted EPS EUR 2.33Book value of equity/share EUR 13.09 11.60 12.11 11.44 9.75Dividend/share EUR 2.851 1.55 0.46 0.71 0.46Dividend/earnings % 117.31 344.4 50.4 37.5 27.8Dividend yield %

Series A 15.661 10.27 2.12 3.30 3.07Series B 15.411 10.47 2.16 3.31 3.07

Price per earnings (P/E)Series A 7.5 36.4 23.8 11.4 9.1Sarja B 7.6 35.7 23.3 11.4 9.1

Price to book value (P/BV)Series A 1.4 1.3 1.8 1.8 1.5Series B 1.4 1.2 1.8 1.9 1.5

Adjusted number of shares 1.000end of financial year 54,200 54,199 53,901 53,868 53,868

on average 54,199 54,050 53,868 53,868 53,8681 Proposal by the Board of Directors

Metra company and share codes:

Helsinki Exchanges METSeries A METASSeries B METBS

Reuters’ RICSeries A METAS.HESeries B METBS.HE

BloombergSeries A META FHSeries B METB FH

12 METRA 199912 METRA 1999

SERIES A QUOTATIONS euro

SERIES B QUOTATIONS euro

TRADED SHARES /month no. ’000

MARKET CAPITALIZATION EUR mill.

0

100

1995 1996 1997 1998 1999

90

80

70

60

50

40

30

20

10

0

Market Capitalization,monthly average5 000

1995 1996 1997 1998 1999

General index Metal index Portfolio index

4 000

3 000

2 000

1 000

100

1995 1996 1997 1998 1999

90

80

70

60

50

40

30

20

10

0

Series A Series B4 000

3 500

3 000

2 500

2 000

1 500

1 000

500

0

1995 1996 1997 1998 1999

General indexLow/high Metal index Portfolio index

General indexLow/high Metal index Portfolio index


The adjacent diagramsdescribe share price trendsfrom 2 January 1995to 31 January 2000.

HEX all-share index, portfolioindex and metal index havebeen indexed to the Metrashare trends.

Since 4 January 1999 allshares on the Helsinki Ex-changes have been quoted ineuro.

Approximately 5 million Met-ra shares were traded on theSEAQ system in London dur-ing 1999.

METRA 1999 13METRA 1999 13

MAJOR SHAREHOLDERS NO. OF SHARES 1,000 % of % ofSERIES A SERIES B votes shares

1. Fiskars Corporation 3,633 4,884 22.9 15.72. Sampo Insurance Company plc 338 148

Industrial Insurance Company Ltd 570 1.000Sampo Life Insurance Company Limited 264 588Sampo Enterprise Insurance Company Ltd 40 1,212 100 1,836 7.8 5.6

3. Varma-Sampo Mutual Pension InsuranceCompany 675 761 4.2 2.6

4. Merita Bank Plc 500 0 2.8 0.95. Agrofin Oy Ab 416 418 2.6 1.56. Ilmarinen Mutual Pension Insurance Co. 250 1,723 2.3 3.67. Tapiola General Mutual Insurance Co. 185 338

Tapiola Mutual Pension Insurance Co. 80 349Tapiola Mutual Life Insurance Co. 20 168Tapiola Corporate Life Insurance Co. 6 291 78 933 2.1 2.3

8. Svenska Litteratursällskapet 274 22 1.6 0.59. The Local Government Pensions Institution 201 606 1.5 1.510.Brita Maria Renlund Foundation 228 330 1.5 1.011. Pohjola Life Insurance Company Ltd 90 250

Pohjola Non-Life Insurance Company Ltd 88 178 260 510 1.3 1.312.Association of Finnish Metal Industries 202 337 1.3 1.013.Signe and Ane Gyllenberg Foundation 201 142 1.2 0.614.The Social Insurance Institution 165 377 1.1 1.015.Sigrid Juselius Foundation 181 181 1.1 0.715 largest, total 8,607 13,060 55.3 39.8

DIVISION OF SHARES SERIES A SERIES BNumber of Number of Number of Number of Number ofshares shareholders % shares % shareholders % shares %

1 -100 6,071 58.4 245,934 1.8 4,9553 1.0 249,506 0.6101-1,000 3,685 35.4 1,155,196 8.3 8,693 54.3 3,070,276 7.71,001-10,000 570 5.5 1,374,490 9.8 2,103 13.1 5,552,809 13.810,001-100,000 57 0.5 1,751,868 12.5 224 1.4 6,043,061 15.0100,001-1,000,000 21 0.2 5,751,964 41.3 39 0.2 9,923,066 24.61,000,001- 1 0.0 3,632,724 26.1 4 0.0 15,378,297 38.2Not transferred – – 22,928 0.2 – – 48.127 0.1

10,405 100 13,935,104 100 16,018 100 40,265,142 100

OWNERSHIP STRUCTURE SERIES A SERIES B TOTAL% of shareholders of shares of shareholders of shares of votes of shares

Private corporations 2.1 8.4 3.0 13.3 29.4 21.7Public corporations – – – – – –Banks and insurance companies 0.2 4.3 0.5 10.0 16.1 14.4Public sector entities 0.2 2.9 0.5 10.8 12.0 13.7Non-profit organizations 3.8 4.3 3.9 9.5 15.7 13.7Households 92.8 4.8 91.2 15.5 19.1 20.3Outside Finland and nominee registered 0.9 0.9 0.9 15.1 7.5 16.1Not transferred – 0.1 – 0.1 0.2 0.1

100 25.7 100 74.3 100 100

Metra has 16,695 registeredshareholders.

The adjacent tables are basedon the book-entry accounts at31 January 2000.

14 METRA 199914 METRA 1999

DEVELOPMENT OF NET SALES

EUR bill.

95

Other operations

96 97 98 99

SanitecImatra SteelWärtsilä NSD

2.5

2.0

1.5

1.0

0.5

0

RESULT

EUR mill. %

20.0

Operating profitProfit after netfinancial items

95 96 97 98 99

ROI %

15.0

10.0

5.0

0

250

200

150

100

50

0

Metra Group’s net sales in 1999 to-talled EUR 2,700.0 (EUR 2,602.6)million. The consolidated profit be-fore extraordinary items was a dis-tinct improvement on the previousyear, EUR 237.0 (44.9) million. Theresult contained substantial profitson asset sales and other non-recur-ring items, generating aggregate netincome of EUR +174.5 million.They include a profit of EUR 94.7million on the sale of Assa AbloyAB (publ.) shares and subscriptionrights and Assa Abloy’s share issue,a profit of EUR 99.8 million on thesale and issue of shares in the sub-sidiary Sanitec Corporation’s InitialPublic Offering, and Wärtsilä NSD´srestructuring provision of EUR 20.0million resulting from the split-upof the joint venture Cummins Wärt-silä. Non-recurring items in 1998had a net impact of EUR +35.3 mil-lion on that year’s result. Eliminat-ing the effects of these items, theGroup’s result from operations be-fore extraordinary items increasedby EUR 52.9 million on the year be-fore.

In order to rationalize its opera-tions Wärtsilä NSD continued im-plementation of its wide-reachingrestructuring programme during theyear. The provision made for thispurpose in 1998 has been used ac-cording to the plan. Wärtsilä NSD´sbusiness focus is now shifting in-creasingly towards deliveries ofcomplete systems along with opera-tions and maintenance services. Itsresult before extraordinary items

improved by EUR 83.0 million butremained a loss of EUR 46.4 millionafter the provision for restructuring.Excluding the effect of non-recurringitems Wärtsilä NSD’s result in 1999was EUR 50.5 million better than inthe previous year.

Sales of marine engines again hitrecord levels and the Service busi-ness continued to grow. Sales ofpower plants, however, remainedslack despite signs of recovery in themarket. Wärtsilä NSD booked neworders totalling EUR 1,853.7 (1,870.8)million during the year. The totalorderbook at the year end stood atEUR 1,314.9 (1,210.2) million.

Imatra Steel’s result was de-pressed by a strong decline in de-mand for special engineering steelproducts early in 1999. The divisionrecorded net sales of EUR 173.0 mil-lion and a profit before extraordinaryitems of EUR 7.1 million, both wellbelow their 1998 levels. The resultwas nonetheless satisfactory in theprevailing market conditions.

Metra’s subgroup Sanitec waslisted on the Helsinki Exchanges inJuly. At the same time Saniteclaunched an Initial Public Offeringand Metra sold part of its Sanitecholding in a public offering. In De-cember Metra paid an additionaldividend almost completely in theform of Sanitec shares. These trans-actions reduced Metra’s holding inSanitec to 64.2%.

Sanitec’s net sales and perform-ance developed well during the year.Net sales rose 10.4% and the profitbefore extraordinary items increased8.4% to EUR 71.3 million. Sanitecrecorded successes in its existingstrong markets as well as consoli-dated its presence through new ac-quisitions. The largest of these wasthe purchase of the Dutch companyN.V. Koninklijke SphinxGustavsberg in December.

Review by the Board of Directors 1999

EUR mill. Change1999 1998 %

Wärtsilä NSD 1,896.6 1,834.6 3.4Imatra Steel 173.0 195.1 –11.3Sanitec 630.0 570.8 10.4Other operations 8.8 10.7Internal sales –8.4 –8.6Group 2,700.0 2,602.6 3.7

NET SALESEUR mill. ROI %

1999 1998 1999 1998

Wärtsilä NSD –28.5 –108.3 –0.1 –11.8Imatra Steel 10.8 20.8 10.0 20.4Sanitec 80.6 77.4 18.4 24.7Other operat. 209.8 97.7Group 272.7 87.6 20.1 9.6

OPERATING PROFIT

METRA 1999 15METRA 1999 15

EARNING PER SHARE,DIVIDEND PER SHARE

euro

2.5

2.0

1.5

1.0

0.5

0

Dividend per shareEarning per shareSupplementary dividend

95 96 97 98 99

GEARING

1.2

95

Net Gearing 1

96 97 98 99

Net Gearing 2

1

0.8

0.6

0.4

0.2

0

*

*Board of Director’s proposal

*Please refer the calculation offinancial ratios on page 39.

The associated company Assa Abloy(publ.) is, like Sanitec, one of Met-ra’s significant holdings. AssaAbloy’s net sales showed furtherlively growth, both organically andthrough acquisitions, rising to EUR1,170.5 (977.4) million. The com-pany also posted a clear improve-ment in profit before extraordinaryitems, EUR 111.7 (85.2) million.

Net sales and resultMetra’s consolidated net sales to-talled EUR 2,700.0 (2,602.6) million.Wärtsilä NSD recorded EUR 1,896.6(1,834.6) million in net sales,Sanitec EUR 630.0 (570.8) millionand Imatra Steel EUR 173.0 (195.1)million.

The consolidated operating profitwas EUR 272.7 (87.6) million, whichincluded Metra’s share of its associ-ated companies’ results, EUR –10.1(-40.5) million. The major items inthis figure were a profit of EUR 17.8million from Assa Abloy and a lossof EUR –27.1 million fromCummins Wärtsilä. The consoli-dated profit before extraordinaryitems rose to EUR 237.0 (44.9) mil-lion. This figure, and the same fig-ure in the previous year, include thenon-recurring items mentioned atthe beginning of this review.

Taxes totalled EUR 95.9 (44.8)million including EUR 85.3 (56.5)million in taxes for the financialyear. The change in deferred tax li-ability increased total taxation byEUR 11.4 million. The effect of non-recurring items in total taxationamounted to EUR 53.1 (9.9) million.

Metra Group posted a net profitof EUR 130.1 (21.7) million andearnings per share of EUR 2.43(0.45). Return on investment (ROI)was 20.1% (9.6%) and return onequity (ROE) was 18.0% (-0.4%).

FinancingWärtsilä NSD’s cash flow varied alsoin 1999, due to the nature of its op-erations. However, all Metra’s divi-sions reported positive cash flowfrom operations during the year.Hence, the Group’s cash flow fromoperations increased to EUR 106.9(103.0) million after non-recurringitems. The Group’s financial positionwas good and net financial expensesdecreased to EUR 35.7 (42.7) million.

The Group had cash reserves to-talling EUR 110.3 (83.9) million atthe close of the period. Net interest-bearing loan capital amounted toEUR 676.8 (594.6) million. The sol-vency ratio improved to 31.4%(28.3%). The same figures, includingthe convertible subordinated deben-tures, were 35.5% and 33.2% respec-tively. The balance sheet increasedto EUR 2,971.2 (2,581.5) million,which was principally due to theconsolidation of Wärtsilä NSD Italia(formerly Grandi Motori Trieste) inthe beginning of the year and to theconsolidation of Sphinx Gustavsbergat the end of the year. Gearing im-proved to 0.68 (0.75). Treating theconvertible subordinated debenturesas interest-bearing debt, gearing was0.90 (1.05).

The Group transferred its maintreasury functions to the main divi-sions at the start of 1999 with theestablishment of Treasury Depart-ments in Wärtsilä NSD and Sanitec.The Group also adopted the commonEuropean currency on 1 January1999. The euro was widely adoptedas the Group’s payment, treasury andreporting currency at the start of theyear, and is being introduced in thebusiness operations in stages.

Capital expenditure and R&DThe Group’s gross capital expendi-ture totalled EUR 263.8 (163.7) mil-lion and net investments were EUR

EUR mill. 1999 1998

Long-term liabilities 403.1 412.8Short-term liabilities 391.2 274.0Preferred capital notes 117.2 117.3Loan receivables –124.4 –125.6Cash and bank balances –110.3 –83.9Net 676.8 594.6

INTEREST-BEARING LOAN CAPITAL

16 METRA 199916 METRA 1999

GROSS CAPITAL EXPENDITUREAND DEPRECIATION

EUR mill.

250

200

150

100

50

0

95 96 97 98 99

In shares and securitiesOther capital expenditureDepreciation

R & D EXPENSES

EUR mill.

95

% of net sales

%

96 97 98 99

90

80

70

60

50

40

30

20

10

0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0

205.4 (133.9) million. EUR 180.0 (41.4) million of this figure coveredacquisitions and investments in se-curities. Hence, other investmentsfell significantly to below the levelof depreciation, which totalled EUR112.9 (110.5) million.

Wärtsilä NSD’s investments inproduction decreased by approxi-mately 30% on the previous yearowing to extensive factory upgradesin previous years well above theneed for normal maintenance in-vestments. New engine testing fa-cilities were introduced at the Vaasafactory during the year and it wasdecided to make a similar invest-ment at the Turku factory duringthe current year. Wärtsilä NSD’soverall net investments in 1999 to-talled EUR 50.3 (69.7) million,which included EUR 8.6 (7.7) mil-lion in investments in acquisitionsand securities.

Sanitec’s net investmentsamounted to EUR 152.1 (62.6) mil-lion, including EUR 122.8 million inacquisitions and securities. Dominoexpanded its factory in Italy in re-sponse to rising demand for showersand bathtubs. Keramag installed anew tunnel kiln at its Haldenslebenfactory, while Sanitec Kolo started agreenfield factory project in Poland.

Imatra Steel’s net investments,EUR 8.8 (11.6) million, related toefficiency improvements and qualityassurance at the Imatra, Kilsta andBillnäs factories.

Wärtsilä NSD’s R&D costsamounted to EUR 73.5 (73.7) mil-lion, corresponding to 3.9% (4.0%)of the division’s net sales. Sanitec’sR&D expenditure totalled EUR 11.3(10.7) million and Imatra Steel’sEUR 2.1 (1.9) million.

Group structural developmentWärtsilä NSD began implementa-tion of an extensive restructuring

programme in autumn 1998 to adjustproduction capacity to the marketsituation, to raise efficiency and to im-prove its performance. Engine manu-facture in Sweden was terminated inautumn 1999, and manufacture of theWärtsilä 28SG gas engine and thecenter of the gas business were trans-ferred to the Netherlands. The opera-tions of the Cummins Wärtsilä jointventure were concentrated at Mul-house in France and Daventry in theUK. At the end of the year it wasdecided to split these operations be-tween the owners, Cummins EngineCompany and Wärtsilä NSD. Thisagreement came into effect in January2000. After the split each companynow concentrates on the engineswithin its core expertise.

The 40% owned associated com-pany Wärtsilä NSD Italia S.p.A. (for-merly Grandi Motori Trieste S.p.A.)became a wholly owned subsidiary ofWärtsilä NSD at the beginning of theyear. This raised Fincantieri CantieriNavali Italiani S.p.A.’s holding inWärtsilä NSD from 12.2% to 15.4%.At the beginning of May WärtsiläNSD acquired the entire share capitalof Wärtsilä NSD Nederland after StorkNV sold its 40% holding. Hence, thesetwo companies were brought moreclosely under Wärtsilä NSD’s manage-ment and control.

Agreement was reached in Febru-ary 2000 that Metra would acquireFincantieri’s 15.4% minority holdingin Wärtsilä NSD. The shares will betransferred to Metra at the end of Feb-ruary, after which Wärtsilä NSD willbe a wholly owned subsidiary of Me-tra.

Sanitec acquired the entire sharecapital of its associated companyJohnson Sanitec and the Germanvacuum toilet systems manufacturerSanivac Vakuumtechnik GmbH at thestart of the year. On 3 June 1999Sanitec made a public offer to acquire

EUR mill. 1999 1998

Acquisitions 122.1 26.6Investments in securities 57.9 14.8Other investments:Wärtsilä NSD 41.7 74.0Imatra Steel 9.0 12.1Sanitec 31.0 34.0Other operations 2.1 2.2Group 263.8 163.7

GROSS CAPITAL EXPENDITURE


METRA 1999 17METRA 1999 17

PERSONNEL ON AVERAGE

18000

95

of which in Finland

96 97 98 99

16000

14000

12000

10000

8000

6000

4000

2000

0

PERSONNEL BY DIVISION31 Dec. 1999

Wärtsilä NSD 46%Imatra Steel 7%Sanitec 47%

the entire share capital of the Dutchcompany N.V. Koninklijke SphinxGustavsberg. The offer was acceptedand the deal came into force in De-cember on completion of the EUCommission’s investigation of theacquisition’s possible impact on thecompetitive situation. The acquisi-tion had a total value of approx.EUR 200 million. SphinxGustavsberg, a leading Europeanmanufacturer of bathroom products,recorded net sales of EUR 287 mil-lion and an operating profit of EUR8 million for the financial yearended 31 March 1999. The EU com-petition authorities approved thedeal subject to Sanitec’s divestmentof the Gustavsberg operations in theNordic countries.

At the end of June Metra and Sa-nitec launched a combined shareoffering and sale. This generated ap-proximately EUR 84.6 million innew shareholders’ equity for Sanitecand EUR 98.4 million for Metra onthe sale of its Sanitec shares. SanitecCorporation was listed on the mainlist of the Helsinki Exchanges on 8July 1999. Metra’s holding in Sanitecat the time decreased to 72.3% andSanitec received roughly 11,000 newshareholders, some two thirds ofwhom were Metra shareholders.

Metra has announced its inten-tion to further reduce its holding inSanitec to below 50%. Part of thisplan was the decision of an extraor-dinary general meeting on 23 No-vember 1999 to distribute an extradividend on 1998 of EUR 1.18 pershare, totalling approx. EUR 64 mil-lion. This additional dividend, paidto Metra shareholders in early De-cember almost entirely in the formof Sanitec shares, further reducedMetra’s holding in Sanitec to 64.2%.Simultaneously, Metra announcedits intention to distribute a furtheradditional dividend in the form of

Sanitec shares in 2000 as well. TheBoard’s dividend proposal for 1999described below in this review isbased on this. Sanitec’s market capi-talization on the Helsinki Exchangeson 31 December 1999 totalled EUR808.7 million.

Metra committed about EUR 35.9million to Assa Abloy’s rights issue,which ended on 2 July 1999 and atthe same time sold its remaining sub-scription rights, yielding a profit ofabout EUR 5.9 million. In NovemberMetra sold 2.5% of its Assa Abloyshares on the Stockholm Stock Ex-change, which produced a profit ofsome EUR 73.0 million. Followingthese transactions Metra owns 21.4%(25.0%) of the Assa Abloy shares and33.0% (33.5%) of the voting rights.Assa Abloy’s market capitalization onthe Stockholm Stock Exchange on 31December 1999 was EUR 4,407 mil-lion.

Personnel and managementThe Group had 15,551 (13,766) em-ployees on average during the year.Personnel numbered 14,422 at thebeginning of the period and 17,937 atthe end. The Group’s Finnish compa-nies employed 3,704 (3,881) people on31 December 1999, which included45 (71) in the parent company. TheGroup’s personnel development andtraining schemes continued to run asbefore. At the end of the year the divi-sions assumed full responsibility fortheir management development andtraining programmes, as planned.

Mr Berndt Brunow was appointedExecutive Vice President of Sanitec inSeptember 1999. He will becomePresident and CEO of Sanitec inMarch 2000. The present Presidentand CEO, Mr Henrik Eklund thensteps down from the position of Presi-dent in order to retire at the end ofthe year.

18 METRA 199918 METRA 1999

Board of Directors and auditorsThe Annual General Meeting washeld on 25 March 1999. In turn forretirement from the Board of Direc-tors were Mr Vesa Vainio, Mr Göran J.Ehrnrooth and Mr Christoffer Taxell,all of whom were re-elected for theperiod from 1999 to 2002. Thenumber of Board members was in-creased to eight and Metra’s Presidentand CEO, Mr Georg Ehrnrooth, waselected as a new member for the sameperiod. Mr Robert G. Ehrnrooth con-tinued as Chairman of the Board andMr Vesa Vainio as Deputy Chairman.

The firm of authorized public ac-countants KPMG Wideri Oy Ab waselected as the company’s auditors.

The AGM also decided to restatethe share capital in euro and thenominal value of the shares as EUR3.50 per share. This was done by in-creasing the share capital through aEUR 7,384,210.33 bonus issue. Thearticles of association were amendedaccordingly.

The extraordinary general meetingof shareholders on 23 November 1999which decided on payment of theaforementioned additional dividendalso decided as a consequence tochange the conversion ratio of thecompany’s convertible subordinateddebentures and the subscription priceof the shares subscribed under thebonds with warrants, correspondingto the amount of additional dividend.

Bonds with warrants and debenturesEight warrants have been exercised tosubscribe for altogether 9,600 Series Bshares based on the 1996 bond withwarrants, corresponding to 0.02% ofthe stock and 0.005% of the votingrights.

Altogether 8,436 A shares and12,284 B shares have been subscribedbased on the conversion rights at-tached to the two 1994 convertiblesubordinated debentures; these sharesrepresented EUR 0.5 million of theprincipal.

Conversions during 1999 raised Met-ra Group’s share capital by EUR2,849 to EUR 189,700,861. There arealtogether 54,200, 246 shares in all:13,935,104 A shares and 40,265,142B shares.

Proposals to the Annual GeneralMeetingThe Board of Directors will proposeto the AGM on 23 March 2000 that,in addition to the dividend of EUR0.50 (FIM 2.97) distributed on thefinancial year ended 31 December1999, an extra dividend of EUR 2.35(FIM 13.97) per share, totalling EUR127,370,578.10 (FIM 757,311,067.33),be distributed in the form of Sanitecshares. However, those shareholderswhose holding of series A or series Bshares does not exceed 99 shares inindividual book-entry accounts onthe record date for dividend paymentwill to this extent be paid the divi-dend in cash. The number of sharesdistributed as dividend will be calcu-lated from the average price of theSanitec Corporation share on theHelsinki Exchanges on the dividendpayment date. Metra will pay thecapital transfer tax due on the divi-dend payment. The other terms andconditions of the dividend distribu-tion are described in the Board’s pro-posal.

With respect to the extra divi-dend distribution, the Board will pro-pose to the AGM that the conversionrate of the 1994 convertible deben-tures and the subscription price ofthe Metra Series B share under thewarrants attached to the 1996 bondwith warrants be changed corre-sponding to the amount of the extradividend.

Furthermore, the Board proposesthat the AGM authorizes it for oneyear to repurchase the company’sown shares in public trading on theHelsinki Exchanges at the prevailingmarket price and other than in pro-portion to the holdings of sharehold-

ers. At most 696,755 A shares and atmost 2,013,257 B shares may be so re-purchased. The authorization re-quested by the Board would also in-clude the right to dispose of the com-pany’s shares at a price no lower thanthe quoted price on the Helsinki Ex-changes, disapplying shareholders’ pre-emptive subscription rights.

Prospects for 2000Owing to the aforementioned struc-tural changes in the Group the pros-pects are estimated by divisions only.

Wärtsilä NSD will seek to capital-ize on the results of its extensive re-structuring programme and strongstrategic position during the year. Thesolid orderbook for marine engineswill provide a good start to the yearand demand in Wärtsilä NSD´s marketsegments is expected to remain good.The power plant business, on theother hand, is burdened by the slowmarket recovery. Further investmentsin operations and maintenance serv-ices will raise the proportion of thisbusiness segment. The net sales ofWärtsilä NSD are expected to increasein 2000. The result of operations willimprove and Wärtsilä NSD’s resultbefore extraordinary items is forecastto enter into profit.

Demand for Imatra Steel’s productsat the start of 2000 appears positiveand is expected to continue that wayat least during the first months of theyear. Imatra Steel’s net sales are esti-mated to rise in 2000 and its result toimprove.

The outlook for the constructionbusiness is good in Sanitec’s mainmarkets in Europe. The impact of theSphinx acquisition on earnings pershare will be positive in 2001. Sphinxand also organic growth will raiseSanitec’s net sales significantly.Sanitec’s profits are estimated to in-crease, although Sphinx will some-what reduce the operating profit as apercentage of sales.


METRA 1999 19METRA 1999 19

Financial Statements

INCOME STATEMENTGroup Parent Company

EUR million Note 1999 % 1998 % 1999 1998

Net sales 1 2,700.0 100.0 2,602.6 100.0 8.1 9.9

Change in inventories of finished goods andwork in progress –82.3 118.1Production for own use 14.0 2.9Other operating income 2 236.6 118.4 182.5 100.9

Materials and servicesMaterials and consumablesPurchases during the financial year –1,058.6 –1,252.1Change in inventories –25.1 –44.2External services –439.7 –387.4

–1,523.4 –1,683.7

Personnel expenses 3 –602.1 –539.6 –3.4 –5.4Depreciation and writedowns 4 –112.9 –110.5 –2.6 –3.1Other operating expenses –347.1 –380.1 –13.6 –10.8Share of profits/losses in associated companies –10.1 –40.5

Operating profit 272.7 10.1 87.6 3.4 171.0 91,5

Financial income and expenses 5Income from financial assets 2.5 3.0 17.8 6,5Other interest income and financial income 55.0 60.6 16.5 14.0Exchange gains and losses 0.3 2.1 –14.3 14.3Interest expenses and other financial expenses –93.5 –108.4 –25.3 –30.7

–35.7 –1.3 –42.7 –1.7 –5.3 4.1

Profit before extraordinary items 237.0 8.8 44.9 1.7 165.7 95.6

Extraordinary items 6Extraordinary income 10.0 1.2Extraordinary expenses –2.5 –13.5 –2.6 –13.6Group contribution 5.0 12.7

–2,5 –3,5 2.4 0.3

Profit before appropriations and taxes 234.5 8.7 41.4 1.6 168.1 95.9

AppropriationsChange in depreciation difference 1.5 1.2

Profit before taxes 234.5 8.7 41.4 1.6 169.6 97.1

Income taxes 7 –95.9 –44.8 –45.8 –20.7Minority interests –8.5 25.1

Profit for the financial year 130.1 4.8 21.7 0.8 123.8 76.4

20 METRA 199920 METRA 1999


BALANCE SHEETAssets Group Parent CompanyEUR mill. Note 31 Dec.1999 % 31 Dec.1998 % 31 Dec.1999 % 31 Dec.1998 %

Fixed assets 8Intangible assetsIntangible rights 9.8 4.6Goodwill on consolidation 189.6 128.1Other long-term expenditure 18.3 17.8 7.3 8.8

217.7 7.3 150.5 5.8 7.3 0.8 8.8 0.9Tangible assetsLand and water 91.5 78.1 25.1 28.0Buildings and structures 233.4 199.0 10.6 13.2Machinery and equipment 328.2 287.8 0.6 0.7Other tangible assets 11.9 11.4 0.5 0.6Advance payments and construction in progress 30.5 23.7 1.4 2.7

695.5 23.4 600.0 23.3 38.2 4.0 45.2 4.4Financial assetsShares in Group companies 482.5 506.8Receivables from Group companies 20.0 0.1Shares in associated companies 195.2 106.3 78.7 51.7Receivables from associated companies 0.5 0.6 0.5 0.6Other shares and securities 98.0 75.0 37.4 47.2Other receivables 10.5 32.2 4.2 29.4

304.2 10.3 214.1 8.3 623.3 65.2 635.8 62.1

Total fixed assets 1,217.4 41.0 964.6 37.4 668.8 70.0 689.8 67.4

Current assetsInventoriesMaterials and consumables 263.8 235.3Work in progress 280.6 314.8Finished products/goods 114.8 79.7Advance payments 8.5 50.0

667.7 22.5 679.8 26.3Long-term receivables 9Trade receivables 9.1 5.2Receivables from Group companies 22.4Receivables from associated companies 10.3 6.2 4.9 0.7Loan receivables 17.0 3.2 1.4 2.0Deferred tax assets 17 41.4 51.1Other receivables 0.1 3.7Prepaid expenses and accrued income 11 3.6 0.8

81.5 2.7 70.2 2.7 6.3 0.7 25.1 2.5

Short-term receivables 10Trade receivables 621.9 551.3 0.2 0.2Receivables from Group companies 240.1 22.7Receivebles from associated companies 15.5 23.5 0.1Loan receivables 97.2 81.5 0.6 0.4Other receivables 38.2 43.2 0.1Prepaid expenses and accrued income 11 121.5 83.5 6.0 4.1

894.3 30.1 783.0 30.3 246.9 25.8 27.6 2.7

Investments 12Other shares and securities 4.8 0.1 4.8 0.4

Cash and bank balances 105.5 3.6 83.9 3.3 29.5 3.1 281.5 27.4Total current assets 1,753.8 59.0 1,616.9 62.6 287.5 30.0 334.2 32.6

Assets 2,971.2 100.0 2,581.5 100.0 956.3 100.0 1,024.0 100.0

METRA 1999 21METRA 1999 21

BALANCE SHEETShareholders’ equity and liabilities Group Parent CompanyEUR mill. Note 31 Dec.1999 % 31 Dec.1998 % 31 Dec.1999 % 31 Dec.1998 %

Shareholders’ equity 13Share capital 189.7 182.3 189.7 182.3Share premium reserve 45.5 52.9 45.5 52.9Other reserves 74.4 64.2Retained earnings 269.6 304.3 258.0 227.4Profit for the financial year 130.1 21.7 123.8 76.4

709.3 23.9 625.4 24.2 617.0 64.5 539.0 52.6

Convertible subordinated debentures 14 117.2 3.9 117.2 4.6 117.2 12.3 117.3 11.5Total shareholders’ equity 826.5 27.8 742.6 28.8 734.2 76.8 656.3 64.1Minority interest 180.4 6.1 57.8 2.2

Accumulated appropriationsDepreciation difference 6.4 7.9Voluntary provisions 0.1 0.1

6.5 0.7 8.0 0.8

Provisions 15Provisions for pensions 76.6 43.5 3.6 3.7Provisions for taxation 10.7 9.1 1.4 1.4Other provisions 86.1 50.2 2.6 2.5

173.4 5.8 102.8 4.0 7.6 0.8 7.6 0.7

Liabilities 16Long-termBonds 54.7 79.9 54.7 79.9Loans from credit institutions 290.7 264.4 89.9 166.7Pension loans 52.9 60.7 14.5 22.1Deferred tax liability 17 65.2 69.2Other long-term liabilities 8.1 10.3

471.6 15.9 484.5 18.8 159.1 16.6 268.7 26.2

CurrentLoans from credit institutions 283.6 144.3 0.2 16.1Pension loans 6.7 4.3 2.0 1.4Advances received 135.4 168.8Trade payables 349.3 375.4 0.3 0.5Liabilities to Group companies 19 0.2 0.4Liabilities to associated companies 19 6.1 18.5 0.7Other current liabilities 144.0 149.9 1.0 30.4Accrued expenses and deferred income 18 394.2 332.6 44.5 34.6

1,319.3 44.4 1,193.8 46.2 48.9 5.1 83.4 8.2

Total liabilities 1,790.9 60.3 1,678.3 65.0 208.0 21.7 352.1 34.4

Shareholders’ equity and liabilities 2,971.2 100.0 2,581.5 100.0 956.3 100.0 1,024.0 100.0

22 METRA 199922 METRA 1999


FINANCIAL ANALYSISGroup Parent Company

EUR mill. 1999 1998 1999 1998

Cash flow from operating activities:Operating profit 272.7 87.6 171.0 91.5Adjustments for:Share of profits in associated companies 10.1 40.5Depreciation and write-downs 112.9 110.5 2.6 3.1Profit and loss on sale of fixed assets –203.5 –91.5 –176.3 –95.0Cash flow before changes in working capital 192.2 147.1 –2.7 –0.4

Changes in working capital:Current assets, non-interest bearing, increase(-)/decrease(+) 51.3 –35.0 16.2 23.4Inventories, increase (-)/decrease(+) 149.4 –99.7Current liabilities, non-interest bearing, increase(+)/decrease(-) –161.3 193.7 –6.0 20.1

39.4 59.0 10.2 43.5

Cash flow from operating activities before financial items and taxes 231.6 206.1 7.5 43.1

Interest and other financial expenses –249.8 –108.1 –68.1 –52.7Dividends received from operating activities 5.3 5.8 16.1 4.2Interest and other financial income from operating activities 206.5 62.3 44.9 52.6Income taxes –86.7 –52.3 –45.8 –20.7Cash flow from operating activities before extraordinary items 106.9 113.8 –45.4 26.5

Cash flow from extraordinary items –10.8 –10.8

Cash flow from operating activities (A) 106.9 103.0 –45.4 15.7

Cash flow from investing activities:Acquisitions –122.1 –26.6Investments in shares –58.0 –14.8 –36.3 –1.8Investments in other tangible and intangible assets –83.6 –106.8 –1.9 –2.1Proceeds from sale of shares 188.3 99.4 201.0 87.6Proceeds from sale of tangible and intangible assets 22.9 23.2 20.2 10.1Loan receivables, increase(-), decrease(+) 18.1 5.1Interest income from investments 0.8 1.5 0.8 1.4Dividends received from investments 1.5 1.6 0.9 0.9Cash flow from investing activities (B) –32.1 –17.4 184.7 96.1

Cash flow from financing activities:Share capital investment by minority shareholders 84.8Issuance of share capital 1.0 1.0Issue premium 5.1 0.0 5.1Loans receivable, increase (-)/decrease(+) 147.9 17.0 –224.4 5.2Current loans increase (+)/decrease(-) –208.4 –43.7 –28.9 19.0New long-term loans 163.9 211.7 84.6 146.0Amortization and other changes in long-term loans –234.0 –283.4 –209.8 –196.2Group contributions 12.7 21.9Paid dividends (1) –21.2 –26.1 –20.6 –24.9Other changes 7.9 –1.6Cash flow from financing activities (C) –59.1 –120.0 –386.4 –22.9

Change in liquid funds (A)+(B)+(C), increase (+)/decrease(-) 15.7 –34.4 –247.1 88.9

Liquid funds at beginning of period 94.6 118.3 281.5 192.6Liquid funds at end of period 110.3 83.9 34.4 281.5The impact of changes in exchange rates on consolidation has been eliminated.1 Dividend 1999 EUR 20.1 million and supplementary dividend mainly in Sanitec shares EUR 7.0 million.

METRA 1999 23METRA 1999 23

The consolidated financial statements of

Metra Corporation have been prepared and

presented in accordance with the Finnish

accounting regulations which came into

force on 31 December 1997. In all essen-

tial respects these comply with the ac-

counting standards issued by the Interna-

tional Accounting Standards Committee

(IASC). Major deviations to these standards

are described below.

The financial statements are presented

in euro. The preparation of the financial

statements in conformity with applicable

regulations and generally accepted ac-

counting principles requires management

to make estimates and assumptions that

affect the valuation and allocation of the

reported figures. Actual results may differ

from such estimates.

Principles of consolidation

The consolidated financial statements in-

clude the accounts of the parent company

and the accounts of its directly or indirectly

owned subsidiaries (over 50% of the vot-

ing rights) and associated companies. Ac-

quired or established subsidiaries and as-

sociated companies are consolidated from

the date of acquisition or establishment

until the end of the period of ownership.

Certain real estate and housing companies

and the Group’s reinsurance company are

not consolidated since they have a negligi-

ble effect on the Group’s result and distrib-

utable equity.

All intra-group transactions as well as

distribution of profit, receivables and li-

abilities, and unrealized margins on intra-

group transactions are eliminated in the

consolidation. Minority interests are pre-

sented in the income statement as a sepa-

rate item after taxes. The share of minor-

ity interests in shareholders’ equity is also

shown separately in the consolidated bal-

ance sheet.

Mutual shareholdings are eliminated

using the purchase method. The goodwill

in the subsidiaries is calculated on the ba-

sis of their acquisition cost by eliminating

the Group’s share of the equity of the ac-

quired subsidiaries, including reserves, less

Accounting Principles

deferred tax liability. Of the difference be-

tween the cost of the acquisition and the

equity of the subsidiaries at the date of ac-

quisition, that amount by which the value

of fixed assets can be considered to exceed

the subsidiary’s balance sheet value has

been entered under fixed assets. The re-

mainder of the difference is recorded as

goodwill. Goodwill is amortized over the

useful life of the asset, nevertheless over a

period not exceeding twenty years.

Investments in associated companies

(voting rights between 20% and 50%) are

included in the consolidated accounts us-

ing the equity method. The consolidated

income statement includes the Group’s

share of results in associated companies

taking into account goodwill write-offs and

dividends received. The Group’s share of

post-acquisition increase of the net assets

of these companies is added to the acqui-

sition cost and to shareholders’ equity. The

book values of the shares of associated

companies are listed in the notes to the fi-

nancial statements as recorded by the

shareholding subsidiaries. Investments in

other companies are listed in the balance

sheet at acquisition cost and the book val-

ues of these shares are written down, if

required, to correspond with their market

value.

N.V. Koninklijke Sphinx Gustavsberg

The balance sheet of Sphinx was consoli-

dated in the Sanitec accounts at 31 Decem-

ber 1999 following approval by the EU

Commission of Sanitec Corporation’s ac-

quisition of N.V. Koninklijke Sphinx

Gustavsberg. Since Sanitec is committed

to divesting Gustavsberg, this company is

not consolidated. The value of the AB

Gustavsberg shares owned by Sphinx have

been revalued in the consolidation to cor-

respond with the estimated divestment

value of the Gustavsberg group companies.

Wärtsilä NSD restructuring provision

The treatment of the Wärtsilä NSD provi-

sion for restructuring in the 1999 accounts

complies in all essential respects with IAS

regulations. However, when preparing the

financial statements it was not possible to

allocate all the items related to the restruc-

turing provision based on the IAS-approved

plan.

Foreign subsidiaries

In the consolidated accounts all items in

the income statements of foreign subsidi-

aries are translated into euros at the aver-

age exchange rates for the financial year.

The balance sheet items of subsidiaries are

translated into euros at the rates of ex-

change ruling on the balance sheet date.

Translation differences arising from the

application of the purchase method are

treated as an adjustment affecting consoli-

dated shareholders’ equity; the translation

difference applying to shareholders’ equity

at the time of acquisition is allocated to

distributable and non-distributable equity.

Those differences which arise from the

translation of income statement items and

balance sheet items at different rates are

recorded under consolidated distributable

equity.

The Group applies the equity hedging

method to hedge most of the sharehold-

ers’ equities of subsidiaries outside the

EMU area using currency loans or forward

contracts, to reduce the effects of exchange

rate fluctuations on the Group’s sharehold-

ers’ equity. Exchange gains and losses re-

sulting from the hedging transactions are

netted against the translation differences

recorded in the shareholders’ equity of the

consolidated balance sheet.

Transactions denominated in foreign

currencies

Business transactions in foreign currencies

are recorded at the rates of exchange pre-

vailing on the transaction date. Receiva-

bles and payables on the balance sheet date

are valued at the exchange rates prevail-

ing on that date. Open hedging instruments

of foreign currency based items, including

interest components, are valued at the bal-

ance sheet date. Exchange gains and losses

related to business operations are treated

as adjustments to net sales and operating

expenses. Exchange gains and losses re-

24 METRA 199924 METRA 1999

lated to financing operations are entered

at their net values under financial income

and expenses.

Revenue recognition

Net sales is calculated by deducting items

including indirect sales taxes and discounts

from gross sales revenues. Revenue is rec-

ognized at the date of delivery except for

large, long-term projects, which are recog-

nized using the percentage-of-completion

method.

Research and development

Research and development costs are

expensed in the financial period in which

they occurred, with the exception of in-

vestments in buildings, machinery and

equipment, which are capitalized and de-

preciated. In the Netherlands, where R&D

is supported by conditional state develop-

ment credits, R&D costs are charged to

earnings after deducting the amount of

these credits. Repayment obligations, if

any, in respect of these credits are recorded

as expenses in the income statement when

realized. The principal of such develop-

ment credits on the balance sheet date is

shown under contingent liabilities in the

notes to the financial statements. In this

respect the treatment of R&D costs differs

from IAS principles.

Pension arrangements

Statutory and supplementary pension ob-

ligations in Finland are covered through

payments to pension insurance institu-

tions and recorded as determined by peri-

odical actuarial calculations prepared by

those institutions. In the Group companies

outside Finland, the pension obligations

are arranged and pension liabilities re-

corded in accordance with local legislation

and practice. Changes in uncovered pen-

sion obligations are entered in the income

statement and the pension liability is in-

cluded in provisions in the balance sheet.

The treatment of pension costs, differs

from IAS principles,but is not estimated

to have a material effect on the financial

statements.

Warranty costs

The estimated warranty costs of goods de-

livered to customers are included under

current liabilities in the balance sheet.

Actual warranty costs, including changes

in warranty liability, are charged against

earnings for the period.

Valuation of inventories

Inventories are valued at their direct ac-

quisition cost, which includes direct

manufacturing costs and an appropriate

proportion of indirect production over-

heads and acquisition costs. The upper

value used in the valuation of inventories

is their net realizable value.

Fixed assets and depreciation

Fixed assets are valued in the balance sheet

at their direct acquisition cost less accu-

mulated depreciation. Certain land and

buildings also include revaluations; these

are stated in the notes to the financial state-

ments.

The following indicative useful lives

are used:

Other long-term

expenditure 3-10 years

Buildings 10-40 years

Machinery and

equipment 5-20 years.

Leasing

Operating leasing payments are treated as

rentals. Significant financial leasing items

are capitalized as fixed assets.

Extraordinary income and expenses

Extraordinary income and expenses in-

clude items which fall outside the ordinary

activities of the company, such as items

arising from divestments of operations.

Appropriations

Appropriations comprise voluntary provi-

sions and the depreciation difference. In the

consolidated accounts accumulated appro-

priations are divided into tax liability and

shareholders’ equity. The change in appro-

priations, net of tax liability, is included

in the result for the year. The amount of

appropriations entered under shareholders’

equity is not regarded as distributable

funds.

Provisions

Provisions in the balance sheet comprise

those items which the Company is com-

mitted to covering either through agree-

ments or otherwise, but which are not yet

realized. These include uncovered pension

liabilities, forecast losses on projects in

progress and restructuring expenses.

Changes to provisions are included in the

income statement.

Income taxes

Income taxes in the income statement in-

clude taxes of subsidiaries for the finan-

cial period, calculated in accordance with

local regulations, as well as adjustments

to prior year taxes and deferred taxes. Taxes

allocated to extraordinary items are pre-

sented in the notes to the financial state-

ments.

Deferred tax liabilities or assets are

calculated as the temporary differences

between the tax and financial periods us-

ing the tax rate for subsequent years con-

firmed on the balance sheet date. The bal-

ance sheet includes deferred tax liabilities

in their entirety and the probable realiz-

able amount of deferred tax assets.

Convertible capital notes

Metra Corporation has made two convert-

ible capital notes issues, which are treated

as equivalent to shareholders’ equity. The

terms are described in the notes to the fi-

nancial statements.

Dividends

Dividends proposed by the Board of Direc-

tors are not recorded in the financial state-

ments until they have been approved by

the Annual General Meeting.

METRA 1999 25METRA 1999 25

Notes to the Financial Statements

1999 1998EUR million % EUR million %

1. Net sales

Net sales by countryGermany 290.8 10.8 236.5 9.1Norway 130.1 4.8 159.9 6.2France 134.2 5.0 146.7 5.6Italy 244.9 9.1 144.8 5.6Sweden 127.3 4.7 133.5 5.1Finland 130.1 4.8 116.0 4.5Spain 108.0 4.0 110.5 4.3Great Britain 99.4 3.7 104.3 4.0The Netherlands 75.0 2.8 93.7 3.6Denmark 64.4 2.4 68.5 2.6Poland 55.4 2.1 53.3 2.0Other European countries 153.5 5.7 110.5 4.2Europe 1,613.1 59.7 1,478.2 56.8India 150.7 5.6 114.4 4.4China and Hong Kong 85.5 3.2 67.3 2.6Philippines 16.5 0.6 62.4 2.4Korea 65.2 2.4 51.6 2.0Japan 56.1 2.1 42.7 1.6Indonesia 12.8 0.5 34.1 1.3Middle East 68.3 2.5 50.8 2.0Other Asian countries 134.0 5.0 188.9 7.2Asia 589.1 21.8 612.2 23.5USA and Canada 127.5 4.7 173.6 6.7South America 116.1 4.3 125.3 4.8Central America 122.1 4.5 103.8 4.0The Americas 365.7 13.5 402.7 15.5African countries 86.4 3.2 66.4 2.5Other countries 45.7 1.7 43.2 1.7Total 2,700.0 100.0 2,602.7 100.0

Group Parent Company1999 1998 1999 1998

Projects for which percentage-of-completion method is appliedUncompleted projectsRecognized accumulated income 676.0 824.6Unrecognized part of income 94.0 196.6Recognized accumulated contribution 77.7 56.7

2. Other operating income

Rental income 2.0 3.0 1.1 1.4Profit on sales of fixed assets 209.2 100.5 181.0 96.4Other operating income 25.4 14.9 0.4 3.1Total 236.6 118.4 182.5 100.9

3. Personnel expenses

Wages and salaries 457.2 419.4 2.8 3.8Pension costs 21.0 18.0 0.3 1.2Other compulsory personnel costs 123.9 102.2 0.3 0.4Total 602.1 539.6 3.4 5.4

Pension costs contain only pension costs for Finnish companies. Pension costs for foreign companiesare included in Other compulsory personnel costs.

26 METRA 199926 METRA 1999


Salaries and emoluments to senior managementPresidents and members of the Boards of Directors 11.9 12.3 0.5 0.5

The CEO and the presidents of some Group Companies have the right to retire at the age of 60 years.The Company’s Board of Directors decides the remunerations of the President and his immediate subordinates.

Personnel on average ChangeWärtsilä NSD 8,472 7,396 1,076Sanitec 5,796 5,034 762Imatra Steel 1,237 1,252 –15Other operations 46 84 –38 45 71Total 15,551 13,766 1,785

4. Depreciation and writedowns

Depreciation according to planIntangible assets 2.4 2.9Goodwill on consolidation 12.7 13.9Other long-term expenditure 6.2 5.0 1.4 1.5Buildings and structures 15.4 16.2 1.0 1.1Machinery and equipment 72.1 68.3 0.2 0.4Other tangible assets 3.4 3.9 0.1Construction in progress 0.1 0.4Total depreciation according to plan 112.3 110.6 2.6 3.1Total book depreciation 2.1 1.9Depreciation difference 0.5 1.2Adjustment of depreciation difference on sold fixed assets 1.0 –0.1

Writedowns of fixed assets 0.6

Depreciation difference on 1 January 7.9 9.0Change in depreciation difference –1.5 –1.1Depreciation difference on 31 December 6.4 7.9

5. Financial income and expenses

Income from financial assetsDividend incomeFrom Group companies 11.0From associated companies 0.1 5.1 4.2From other companies 1.6 1.6 0.9 0.9Total 1.7 1.6 17.0 5.1

Interest income from financial assetsFrom other companies 0.8 1.4 0.8 1.4Income from financial assets, total 2.5 3.0 17.8 6.5

Other interest income and financial incomeFrom Group companies 12.4 11.3From other companies 55.0 60.6 4.1 2.7Total 55.0 60.6 16.5 14.0

Exchange gains and losses 0.3 2.1 –14.3 14.3

Writedowns of financial assets –1.4

METRA 1999 27METRA 1999 27


Interest expenses and financial expensesTo Group companies –0.7 –0.4To other companies –92.1 -108.4 –24.6 –30.3Total –92.1 -108.4 –25.3 –30.7

Financial income and expenses, total –35.7 –42.7 –5.3 4.1

6. Extraordinary income and expenses

Discontinued operations 1.1 1.2Share writedowns –2.6 –1.5 –2.6 –1.5Deferred tax, change in accounting principles 8.8Other income 0.1Allowances for damages –3.6 –3.6Single payments for pension and life annuity –8.4 –8.4Group contributions received 5.0 12.7Total –2.6 –3.5 2.4 0.4

7. Income taxes

Income taxes on operations- for the financial year –85.3 –56.5 –46.2 –25.3- for prior years 0.8 4.2 0.4 4.6Change in deferred tax –11.4 7.5Total –95.9 –44.8 –45.8 –20.7

Income taxes on extraordinary items 0.7 2.8 –0.7 –0.8

8. Fixed assets

RevaluationsLand 16.9 19.7 16.9 19.7

Amount of goodwill on consolidation of associated companies,which has not yet been amortized 8.7 10.6

Capitalized interest expensesCapitalized interest expenses, which have not yet been amortizedBuildings and structures 0.5 0.5Machinery and equipment 1.3 1.3Total 1.8 1.8

28 METRA 199928 METRA 1999

Fixed assets Accum.depreciation Writedowns Residual

Acquisition and Accum. Depreciation and valuecost writedowns depreciation during their on

on 1 Jan. Increases Decreases on 1 Jan. in decreases year reversals 31 Dec.

GroupIntangible assetsIntangible rights 14.3 5.6 –1.2 –7.1 0.6 –2.4 9.8Goodwill on consolidation 173.8 81.7 –53.2 –12.7 189.6Other long-term expenditure 53.0 4.1 –1.8 –32.2 1.4 –6.2 18.3Group 1999 241.1 91.4 –3.0 –92.5 2.0 –21.3 217.7Group 1998 228.7 34.0 –0.5 –90.3 0.4 –21.8 150.5

Tangible assetsLand and water 82.6 16.9 –6.9 -0.5 –0.6 91.5Buildings and structures 358.7 18.1 –12.7 -118.5 3.2 –15.4 233.4Machinery and equipment 751.1 52.2 –13.9 -400.9 11.8 –72.1 328.2Other tangible assets 27.3 3.2 -1.1 -14.8 0.7 –3.4 11.9Advance payments and constr’n in progress 29.3 16.5 –13.9 –1.9 0.6 –0.1 30.5Group 1999 1,249.0 106.9 –48.5 –536.6 16.3 –91.0 –0.6 695.5Group 1998 1,173.5 114.3 –100.8 –558.6 60.2 –88.7 599.9

Financial assetsShares in associated companies 201.0 37.8 –42.7 –0.9 195.2Receivables from associated companies 0.6 –0.1 0.5Shares in other companies 91.0 35.7 –24.1 –4.1 –0.5 98.0Receivables from other companies 32.2 –21.7 10.5Group 1999 324.8 73.5 –88.6 –4.1 –1.4 304.2Group 1998 295.0 16.3 –97.0 –1.5 212.8

Parent companyIntangible assetsIntangible rights 0.4 –0.3 0.1Other long-term expenditure 18.6 –9.9 –1.4 7.3Parent company 1999 19.0 –10.2 –1.4 7.4Parent company 1998 19.0 –8.8 –1.5 8.7

Tangible assetsLand and water 28.0 0.1 –0.3 –2.8 25.0Buildings and structures 31.1 0.4 –1.9 –18.0 –1.0 10.6Machinery and equipment 6.7 0.1 –0.1 –6.0 –0.2 0.5Other tangible assets 1.5 –0.9 0.6Construction in progress 2.7 1.3 –2.5 1.5Parent company 1999 70.0 1.9 –4.8 –24.9 –1.2 –2.8 38.2Parent company 1998 83.1 2.0 –15.2 –23.5 0.3 –1.6 45.1

Financial assetsShares in Group companies 506.9 0.3 –24.7 482.5Shares in associated companies 51.7 35.8 –8.8 78.7Shares in other companies 48.7 0.4 –7.6 –1.5 –2.6 37.4Parent company 1999 607.3 36.5 –41.1 –1.5 –2.6 598.6Parent company 1998 648.7 2.4 –13.7 –1.5 635.9

METRA 1999 29METRA 1999 29


9. Specification of long-term receivables

Receivables from Group companiesLoan receivables 22.4Receivables from associated companiesLoan receivables 10.3 6.2 4.9 0.7

10. Specification of short-term receivables

Receivables from Group companiesTrade receivables 0.1 0.1Loan receivables 238.9 22.0Prepaid expenses and accrued income 1.1 0.6Total 240.1 22.7

Receivables from associated companiesTrade receivables 13.8 10.9Loan receivables 1.4 11.4 0.1Prepaid expenses and accrued income 0.3 1.2Total 15.5 23.5 0.1

11. Main items in prepaid expenses and accrued income

Interest 3.6 3.0 0.1 0.5Other financial items 12.6 2.2 0.2 1.2Income and other taxes 32.3 17.0 3.4Other 76.6 62.1 2.2 2.4Total 125.1 84.3 5.9 4.1

12. Investments in shares and securities

Market value 8.4 8.4Book value 4.8 4.8Difference 3.6 3.6

13. Shareholders’ equity

Share capitalShare capital on 1 Jan.Series A 46.9 46.9 46.9 46.9Series B 135.4 134.4 135.4 134.4Total 182.3 181.3 182.3 181.3

Bonus issue 7.4 7.4Exchange of warrants for shares 1.0 1.0Conversion of debentures 0.1 0.1

Share capital on 31 Dec.Series A 48.8 46.9 48.8 46.9Series B 140.9 135.4 140.9 135.4Total 189.7 182.3 189.7 182.3

Share premium reserveShare premium reserve on 1 Jan. 52.9 47.8 52.9 47.8Bonus issue -7.4 -7.4Issue premium 5.1 5.1Share premium reserve on 31 Dec. 45.5 52.9 45.5 52.9

30 METRA 199930 METRA 1999


Other reservesOther reserves on 1 Jan. 64.2 72.7Transfers from retained earnings/to retained earnings -1.9 2.6Translation differences and other changes 12.1 -11.1Other reserves on 31 Dec. 74.4 64.2

Retained earningsRetained earnings on 1 Jan. 326.0 352.9 303.8 263.6Dividend distribution/ordinary shareholders’ meeting –20.1 –24.9 –20.1 –24.9Dividend distribution in Sanitec shares/extraordinary shareholders’ meeting –23.0 –6.5Dividend distribution in cash/extraordinary shareholders’ meeting –0.5 –0.5Taxes on distributed Sanitec shares –15.9 –15.9Reversal of revaluation –2.8 –11.3 –2.8 –11.2Change in deferred tax liability on revaluation 0.8 –5.5Transfers to other reserves/from other reserves 1.9 –2.6Net change in translation differences –4.1 –4.3Other changes 7.2Profit/loss for the year 130.1 21.7 123.8 76.3Retained earnings 31 Dec. 399.6 326.0 381.8 303.8

Distributable equityRetained earnings 31 Dec. 399.6 326.0 381.8 303.8Voluntary provisons and depreciation difference –58.8 –67.4Deferred tax liability 17.4 19.8Undistributable share issue gains –54.3Distributable equity 303.9 278.4 381.8 303.8

14. Convertible subordinated debentures 117.2 117.2 117.2 117.2

Main terms:* Two issues of convertible subordinated debentures, each carrying principal of FIM 350 million at the date of issue.* Should Metra Corporation be put into liquidation or become bankrupt, the principal of the loan shall rank junior to Metra Corporation’s other obligations (and equal to the Company’s other equivalent loans raised to strengthen shareholders’ equity).* The loans are dated on 24 March 1994. The notes are not collaterilized and are perpetual.* Metra Corporation is entitled to pay back the principal with interest at any time from 2 May 2004 assuming that the Company and the Group still have distributable equity after making the payment. Furthermore, Metra Corporation is entitled to pay back the principal on the same terms if the share price exceeds the conversion price by at least 40 percent, in which case note holders are entitled to convert their notes to Company shares before payback.* The notes shall pay fixed interest of 7.8 percent until 2 May 2004, and thereafter a rate of interest to be fixed annually which shall exceed the 12-month Euribor rate by five percentage points.* Interest may be paid annually only to the extent that the payments do not exceed the distributable equity shown in the most recent approved financial accounts. Any interest left unpaid shall remain the liability of the Company. Interest is paid before dividend.* Each bond of nominal value FIM 10,000 convertible into Series A shares may be exchanged for 39 Series A shares and 39 Series B shares. The aggregate conversion price of one Series A share and one Series B share is EUR 43.125 (FIM 256.41).* Each bond of nominal value FIM 10,000 convertible into Series B shares may be exchanged for 78 Series B shares. The aggregate conversion price of two Series B shares is EUR 43.125 (FIM 256.41).* The conversion right commenced on 1 June 1994 and the annual period of conversion shall extend from January 2 to November 30 inclusive. The conversion right will end 14 days prior to the maturity of the notes.* By 31 December 1999 altogether 407 Series A shares and 407 Series B shares had been converted. This represents a loan capital of FIM 110,000 and by this amount the principal has decreased.

15. ProvisionsProvisions for pensions 76.6 43.5 3.6 3.7Provisions for taxation 10.7 9.1 1.4 1.5Other provisions: Internal restructuring 48.8 13.4 Foreseeable losses and cost reservations 11.6 24.3 Litigation 4.9 8.0 Other 20.8 4.5 2.6 2.5Other provisions, total 86.1 50.2 2.6 2.5Provisions, total 173.4 102.8 7.6 7.7Change in provisions 70.6 5.9 –0.1 –1.5

METRA 1999 31METRA 1999 31


16. Liabilities

Long-termNon interest-bearing 68.4 71.7Interest-bearing 403.1 412.8 159.1 268.6Total 471.5 484.5 159.1 268.6

CurrentNon interest-bearing 928.2 919.8 45.3 35.4Interest-bearing 391.2 274.0 3.6 48.1Total 1,319.4 1,193.8 48.9 83.5

Bonds1993-2002, 6-month Euribor 25.2 25.21994-2001, 6-month Euribor 50.5 50.5 50.5 50.51994-2002, 6-month Euribor 4.2 4.2 4.2 4.2Total 54.7 79.9 54.7 79.9

Bond with warrants 1996 0,0 0,0 0,0 0,0Main terms:* Principal FIM 180,000.* Each FIM 1,000 bond carries a warrant to subscribe for 1,200 Series B shares, nominal value EUR 3.50, for a subscription price of EUR 15.84 (FIM 94.18) per share.* The loan is dated on 2 May 1996. The conversion period commenced on 1 September 1996 and will end on 2 May 2003, on which date the principal will also be repaid.* Annual interest on bonds is equivalent to the Bank of Finland’s base rate minus 1 percentage point.* 34 executives have subscribed for the loan.

Long-term debt with maturity profileBonds Bank Pension Other

loans1 loans loans Total

2000 12.9 6.6 1.0 20.52001 50.5 132.8 6.6 3.3 193.22002 4.2 43.9 6.6 0.6 55.32003 76.0 5.6 0.3 81.92004 9.2 4.9 0.3 14.42005 - 28.8 29.2 0.4 58.4Total 31 Dec.1999 54.7 303.6 59.5 5.9 423.7Total 31 Dec.1998 79.9 285.6 65.1 9.4 440.0

1 inclusive Revolving Credit loans amounting to EUR 117.6 million, which can be repaid and drawn again.

Division of long-term loans by currency 31 Dec.1999 31 Dec.1998

EUR 78% 64%USD 17% 28%SEK 2% 3%PLN 1% 3%Other currencies 2% 2%


17. Specification of deferred tax assets and liabilities

Deferred tax assetsBased on consolidation 16.1 24.1Based on balance sheets of Group companies 25.2 27.0Total 41.3 51.1

32 METRA 199932 METRA 1999


Deferred tax liabilitiesBased on appropriations 31.4 25.2Based on consolidation 22.7 16.7Based on balance sheets of Group companies 11.1 27.3Total 65.2 69.2

Revaluations are included in the calculation of deferred tax liabilities.Parent company’s deferred tax has been included in the Group.

18. Main items in accrued expenses and deferred income

Warranty costs 75.5 56.1Project costs 88.4 62.7 0.3Income and other taxes 61.9 50.1 36.3 23.0Personnel expenses 83.5 68.9 0.3 0.5Interest and other financial items 25.5 24.0 7.5 10.1Other 59.4 70.8 0.4 0.7Total 394.2 332.6 44.5 34.6

19. Specification of current liabilities

Liabilities to Group companiesTrade payables 0.1Other current liabilities 0.2 0.2Accrued expenses and deferred income 0.1Total 0.2 0.4

Liabilities to associated companiesAdvances received 0.2Trade payables 4.8 14.8 0.7Other liabilities 1.2 0.3Accrued expenses and deferred income 0.1 3.2Total 6.1 18.5 0.7

20. Collateral, contingent liabilities and other commitments1999 1998

Balance sheet Balance sheetdebt Collateral debt Collateral

GroupMortgages given as collateral for liabilities and commitmentsLoans from credit institutions 16.9 24.5 19.5 23.5Pension loans 46.8 47.8 35.0 41.5Off balance sheet commitments 18.7 25.1Total 63.7 91.0 54.5 90.1

Chattel mortgages given as collateral for liabilitiesLoans from credit institutions 5.9 10.0 0.1 3.7Off balance sheet commitments 1.9 1.7Total 5.9 11.9 0.1 5.4

Other pledges given as collateral for liabilitiesLoans from credit institutions 0.3 0.1 3.3 5.4Other liabilities 0.8 0.1 1.1Off balance sheet commitments 1.1 4.7Total 0.3 2.0 3.4 11.2

METRA 1999 33METRA 1999 33

1999 1998Balance sheet Balance sheet

debt Collateral debt Collateral

Parent companyMortgages given as collateral for liabilities and commitmentsLoans from credit institutions 16.9 17.0 0.6 0.5Off-balance-sheet commitments 14.6 13.5Total 16.9 31.6 0.6 14.0


Collateral on behalf of Group companiesMortgages 1.3 5.9

Guarantees and contingent liabilitieson behalf of Group companies 440.6 503.1 163.0 246.7on behalf of associated companies 95.7 97.6 48.8 61.2on behalf of others 4.9 2.3 0.3 0.2

Other commitmentsAll pension liabilities are included in the balance sheet.

Nominal amounts of rents according to leasing contractsPayable within one year 9.9 7.5Payable after one year 37.4 35.4Total 47.3 42.9

21. Inner circle loans and commitments

There are no loan receivables from senior management and the members of the Board of Directors.No pledges or other commitments were given on behalf of senior management or shareholders.

22. Nominal values of derivative instruments on 31 December 1999Total amount of which closed

contracts

Interest rate options; purchased 39.8Interest rate options; written 29.9Interest rate swaps 339.1Foreign exchange forward contracts 962.6 133.1Currency options; purchased 36.4Curreny options; written 10.5Total 1,418.3 133.1

If all the above instruments were reversed (sold) at market prices at the year end, the net effect would be EUR 2.1 million.

23. Exchange rates Closing rates Average rates31 Dec.99 31 Dec.98 1999 1998 **

FIM 5.94573 5.94573 5.94573 5.99400USD 1.00460 1.16675 1.06580 1.12216GBP 0.62170 0.70547 0.65874 0.67752SEK 8.56250 9.48736 8.80750 8.91832NOK 8.07650 8.87158 8.31040 8.46849CHF 1.60510 1.60778 1.60030 1.62527DEM 1.95583 1.95583 1.95583 1.97294NLG 2.20371 2.20371 2.20371 2.22387FRF 6.55957 6.55957 6.55957 6.61443ITL* 1.93627 1.93627 1.93627 1.94610*1.000 units** EUR/ECU

34 METRA 199934 METRA 1999

24. Shares and securities Book value ‘000Metra Indirect

Nominal value Corp. ownershipNumber of Share ‘000 direct through

shares % Currency Currency ownership subsidiary

SUBSIDIARIESWärtsilä NSD Oy Ab Finland 14,544,704 84.6* FIM 1,454,470 EUR 347,858Wärtsilä NSD Finland Oy Finland 4,800,000 100.0 FIM 480,000 EUR 100,912Wärtsilä Development & Financial Services Oy Finland 100.0 FIM 15 EUR 3Wärtsilä NSD Nederland B.V. The Netherlands 63,825 100.0 NLG 100,825 EUR 32,787Wärtsilä NSD Sweden AB Sweden 40,000 100.0 SEK 40,000 DKK 150,407Wärtsilä NSD Norway A/S Norway 20,000 100.0 NOK 60,000 EUR 10,079Wärtsilä NSD Iberica S.A. Spain 15,000 100.0 ESP 150,000 EUR 3,875Wärtsilä NSD Motores (Portugal) Lda. Portugal 100.0 PTE 40,410 EUR 225Wärtsilä NSD Danmark A/S Denmark 61,320 100.0 DKK 61,320 EUR 9,631Wärtsilä NSD Deutschland GmbH Germany 100.0 DEM 1,000 EUR 507Wärtsilä NSD UK Ltd. Great Britain 1,050,000 100.0 GBP 1,050 EUR 2,876

Wärtsilä NSD Ireland Ltd. Ireland 10,000 100.0 IEP 10 IEP 10Wärtsilä Diesel Polska Sp.z.o.o. Poland 5,120 100.0 PLN 512 EUR 138Wärtsilä Diesel Hellas S.A. Greece 700 100.0 GRD 20,000 EUR 369Wärtsilä NSD Cyprus Ltd. Cyprus 1,000 100.0 GRD 5,069 EUR 118Wärtsilä NSD North America, Inc. USA 50,000 100.0 USD 40,000 EUR 37,988

Wartsila Operations, Inc. USA 100 100.0 USD 10 USD 10Wärtsilä NSD Canada Inc. Canada 420 100.0 CAD 1,300 USD 1,172Wärtsilä NSD de Mexico, SA. Mexico 100 100.0 MXP 50,000 USD 3,236

Wärtsilä NSD Latin America Ltd. Bermuda 900 100.0 USD 900 EUR 704Wärtsilä NSD Chile Ltda. Chile 100.0 CLP 500 EUR 794Wärtsilä NSD del Ecuador S.A. Ecuador 70,000 100.0 ESC 70,000 USD 491Wärtsilä NSD do Brasil Ltda. Brazil 144,300 100.0 BRL 144 USD 306Wärtsilä NSD de Colombia S.A. Columbia 9,469 100.0 COP 10,000 USD 35Wärtsilä NSD del Peru S.A. Peru 1,960 100.0 PEN 20 USD 107Wärtsilä NSD del Argentina S.A. Argentina 12,500 100.0 USD 0 USD 172Wärtsilä NSD Venezuela, C.A. Venezuela 8,500 100.0 VEB 1,700 USD 10

Wärtsilä NSD Caribbean, Inc. Puerto Rico 250,000 100.0 USD 578 EUR 0Wärtsilä Development & Financial Services, Inc. USA 100 75.0 USD 3,000 EUR 2,285Wärtsilä NSD Singapore Pte Ltd. Singapore 13,000,000 100.0 SGD 13,000 EUR 3,151Wärtsilä NSD China Ltd. Hong Kong 300,000 100.0 HKD 30,000 EUR 3,095Nippon Wärtsilä Diesel Co. Ltd. Japan 400 100.0 JPY 20,000 EUR 701Wärtsilä NSD Korea Ltd. South Korea 15,000 100.0 WON 695,000 EUR 894Wärtsilä NSD Taiwan Ltd. Taiwan 1,450 96.7 TWD 15,000 EUR 401Wärtsilä NSD Philippines Inc. Philippines 126,976 100.0 PHP 12,698 EUR 645PT. Wärtsilä NSD Indonesia Indonesia 45,484 100.0 IDR 53,535,845 EUR 10,289Wärtsilä NSD Australia Pty Ltd. Australia 999,998 100.0 AUD 1,000 EUR 545Wärtsilä NSD India Ltd. India 6,137,300 51.0 INR 61,373 EUR 11,952Wärtsilä NSD Pakistan (Pvt.) Ltd. Pakistan 7,775,000 100.0 PKR 166,447 EUR 3,713Wärtsilä Diesel Saudi Arabia Ltd. Saudi Arabia 3,660 60.0 SAR 3,660 EUR 1,195Wärtsilä NSD Gulf FZE Unit. Arab Em. 1 100.0 AED 1,000 EUR 213Wärtsilä NSD Middle East S.a.r.l. Lebanon 100.0 LBP 100,000 EUR 51Wärtsilä NSD South Africa (Pty) Ltd. South Africa 1,500,000 100.0 ZAR 1,500 EUR 316Wärtsilä NSD Mediterranean Ltd. Cyprus 1,000 100.0 CYP 10 EUR 17Wärtsilä NSD Eastern Africa Ltd. Kenya 100.0 KES 1,000 EUR 15Wärtsilä NSD Italia S.p.A. Italy 100.0 ITL 127,000,000 EUR 71,560Wärtsilä NSD Switzerland Ltd. Switzerland 50,000 100.0 CHF 50,000 EUR 57,273

NSD Japan Ltd. Japan 400 100.0 JPY 20,000 JPY 20,000Wärtsilä Diesel Japan Company Ltd. Japan 50.0 JPY 100,000 EUR 772Wärtsilä NSD France S.A. France 100.0 FRF 174,908 EUR 55,045

METRA 1999 35METRA 1999 35

Shares and securities Book value ‘000Metra Indirect



Sanitec Corporation Finland 39,966,028 64.2* EUR 41,565 EUR 52,089Ido Kylpyhuone Oy Finland 300,000 100.0 FIM 30,000 EUR 5,046

Ido Badrum AB Sweden 20,000 100.0 SEK 2,000 EUR 1,795Porsgrund Oy Finland 600 100.0 FIM 600 EUR 101

Porsgrund Bad AS Norway 10,000 100.0 NOK 10,000 EUR 1,019Ifö Sanitär AB Sweden 20,000 100.0 SEK 20,000 EUR 5,887

Fastighets AB Pressarna Sweden 100,000 100.0 SEK 10,000 SEK 20,882Ifö Sanitär A/S Norway 20 100.0 NOK 200 SEK 185Scandi-aqualine A/S Denmark 70,000 100.0 DKK 7,000 SEK 14,770Scandiaqua Sp.zo.o. Poland 4,995 100.0 PLN 500 SEK 1,882

Sanitec International S.A. France 1,775,000 100.0 FRF 177,500 EUR 105,960Allia S.A. France 1,099,994 100.0 FRF 109,999 FRF 109,999

Polyroc S.A. France 67,995 99.9 FRF 680 FRF 8,502Omnium de Distribution Sanitaires S.A.S. France 2,499 99.9 FRF 250 FRF 250Omnium de Distribution Sanitaires Poland 1,000 99.9 PLN FRF 170

Keramag Keramische Werke AG Germany 4,572,500 95.3 DEM 23,289 EUR 25,812Hutschenreuther-Keramag GmbH Germany 47.7 DEM 1,500 DEM 2,587Keramag Haldensleben GmbH Germany 95.3 DEM 5,254 DEM 5,263Keramag Vertriebs Holding GmbH Germany 95.3 DEM 1,000 DEM 1,000Varicor S.A. France 6,358 95.3 FRF 6,358 DEM 5,185Spectra Vertriebsgesellschaft GmbH Germany 15,000 95.3 DEM 1,500 DEM 1,556

Eurocer Industria de Sanitarios S.A. Portugal 540,000 100.0 PTE 54,000 FRF 23,748Laminex Sp. z o.o. Poland 10,040 99.0 PLN 2,510 FRF 10,336Murena S.A. France 2,573 99.9 FRF 1000 FRF 206,241

Leda S.A. France 49,994 99.9 FRF 100 FRF 69,992 Leda Production S.A. France 4,994 99.9 FRF 400 FRF 250 Leda Tech S.A. France 2,994 99.9 FRF 100 FRF 249 De Touraine S.A. France 10,134 99.8 FRF 670 FRF 134,547 S.N.B. Manufacture E.U.R.L. France 500 100.0 FRF 100 FRF 50

N.V. Koninklijke Sphinx Gustavsberg The Netherlands 9,242,014 99.9 NLG 23,105 FRF 788,107Sphinx Gustavsberg Sanker spol. S.r.o. Slovakia 1 99.9 SIT 112,291 EUR 706Gustavsberg Poland Sp.z.o.o. Poland 1,000 99.9 PLN 200 EUR 49Sphinx Gustavsberg Wroclaw Sp.z.o.o. Poland 199,000 80.4 PLN 400 EUR 3,714B.V. Aardewerkfabriek “De Toekomst” The Netherlands 400 99.9 NLG 400 EUR 182Warneton Industrie S.A. Belgium 3,178,117 99.9 BEF 391,878 EUR 6,706Gustavsberg International B.V. The Netherlands 4,000 99.9 NLG 4,000 EUR 9,071

Baduschko Vertriebsges. m.b.H. Austria 1 99.9 ATS 500 EUR 0Richard Heinze Gesellschaft m.b.H. Austria 1 99.9 ATS 500 EUR 128Richard Heinze Ges.m.b.H.& Co KG Austria 2 99.9 ATS 5,696 EUR 0Sphinx Gustavsberg Belgium N.V. Belgium 25,250 99.9 BEF 25,250 EUR 622Koralle S.a.r.l. France 1,000 99.9 FRF 100 EUR 0Sphinx Bathrooms Ltd Great Britain 900,000 99.9 GBP 900 EUR 2,292Bekon-Koralle AG Switzerland 1,000 99.9 CHF 1,000 EUR 1,387 Koralle Sp.Z.o.o. Poland 800 99.9 PLN 400 EUR 58Sphinx Services B.V. The Netherlands 40 99.9 NLG 40 EUR 7,344 Sphinx Sanitair B.V. The Netherlands 1,000 99.9 NLG 1,000 EUR 14,029 Sanitair Techniek Rosmalen B.V. The Netherlands 600 99.9 NLG 60 EUR 613Deutsche Sphinx Beteiligungen GmbH Germany 2 99.9 DEM 25,403 EUR 8,524 Gustavsberg International GmbH Germany 1 99.9 DEM 50 EUR 3,043 Deutsche Sphinx Sanitär GmbH Germany 2 99.9 DEM 4,050 EUR 13,431 Koralle Sanitär Produkte GmbH Germany 1 99.9 DEM 1,550 EUR 5,905

Evac International Oy Finland 500 100.0 FIM 5,000 EUR 1,705AquaMar Wasserbehandlung GmbH Germany 70.0 DEM 50 EUR 338Evac AB Sweden 70,000 100.0 SEK 7,000 EUR 758

36 METRA 199936 METRA 1999

Shares and securities Book value ‘000Metra Indirect



Evac Oy Finland 70,000 100.0 FIM 7,000 EUR 1,040Evac S.r.l. Italy 100.0 ITL 150,000,000 EUR 716Evac S.A.R.L. France 500 100.0 FRF 50 EUR 115Evac (U.K.) Ltd. Great Britain 2 100.0 GBP 0 EUR 0

Envirovac Inc. USA 1,010 100.0 USD 1,246 EUR 923Envirovac Inc. Canada 1 100.0 CAD 1 USD 1Evac GmbH Germany 100.0 DEM 300 USD 215

Sanitec Kolo Sp. z o.o. Poland 413,024 99.5 PLN 20,651 EUR 12,371Sanitec International GmbH Germany 1 100.0 DEM 250,000 EUR 100Sanitec Leasing AB Sweden 1,000 100.0 SEK 100 EUR 2,523Sanitari Pozzi S.p.A. Italy 4,956,597 100.0 ITL17,348,090,000 EUR 4,161Domino S.p.A. Italy 2,666,996 100.0 ITL 2,666,996,000 EUR 32,153Sanitec Servizi Logistici S.r.l. Italy 80,000 100.0 ITL 8,000,000,000 EUR 4,152Sanitec Holding AG Switzerland 15,000 100.0 CHF 3,750 EUR 15,776

Sanitec Johnson Suisse Sdn Bhd Malaysia 20,145,455 83.9 MYR 20,146 CHF 6,461

Imatra Steel Oy Ab Finland 104,000 100.0* FIM 104,000 EUR 46,612Imatra Kilsta AB Sweden 200,000 100.0 SEK 20,000 EUR 8,478

Imatra Tooling AB Sweden 1,000 100.0 SEK 1,000 SEK 4,900Imatra Stahl GmbH Germany 100.0 DEM 100 EUR 45Imatra Steel Ltd. Great Britain 100.0 GBP 50 EUR 65Imatra Steel S.A.R.L. France 100.0 FRF 200 EUR 32Metra Finance Oy Ab Finland 382,000 100.0 FIM 191,000 EUR 32,125Vulcan Insurance Ltd. 1 Great Britain 2,000,000 100.0 GBP 2,000 EUR 336Metra Corporation housing corporations (48) EUR 2,796Metra Corporation others (4) EUR 703Total 482,5191 Non consolidated; profit EUR 231 thousand, shareholders’ equity EUR 814 thousand.

ASSOCIATED COMPANIESAssa Abloy AB (publ.) Sweden 67,323,823 21.4 SEK 17,710 EUR 73,660Cervuctum Oy 1) Finland 250,000 31.3 FIM 25,000 EUR 4,205Cummins Wärtsilä S.A. France 3,767,784 50.0 FRF 376,778 EUR 29,439Wasa Pilot Power Plant Oy Finland 9,980 49.9 FIM 9,980 EUR 1,679Wartsila Navim Diesel S.r.l. Italy 40.0 ITL 24,000 EUR 13Ina/Ifö Co Ltd. Japan 60,000 50.0 JPY 30,000 SEK 947Raftery Holding B.V. The Netherlands 10 50.0 NLG 10,000 USD 14Metra Corporation others (3) EUR 835Total 78,7001 Non consolidated; loss EUR -314 thousand, shareholders’ equity EUR 22.699 thousand.

OTHER COMPANIESSato-Yhtymä Oyj Finland 104,383 FIM 1,044 EUR 1,853 135Kiinteistö Oy Nordic Hotellikiinteistöt Finland 80,000 19,0 FIM EUR 12,782Polar Real Estate Corporation Finland 14,463,438 8,0 FIM 72,317 EUR 14,161Rautaruukki Oyj Finland 29,416 0,1 FIM 294 EUR 59Sampo Insurance Company plc Finland 380,200 0,6 FIM 1,901 EUR 3,798St. Laurence Golf Oy Finland 50 22,7 FIM ,000 EUR 158Power Partners Oy Finland 487,500 FIM 4,875 EUR 820Metra Corporation housing corporations (17) EUR 1,478

Metra Corporation others (33) EUR 3,111Total 37,400

Metra Corporation; total shares and securities 598,618A complete list of shares and securities in accordance with the Finnish Companies Act is included in the official financial statements.*) Share of group and parent company. The percentage referring to other subsidiaries indicates the ownership share within the respective subgroup.

METRA 1999 37METRA 1999 37

Proposal of the Board

On 31 December 1999 the consoli-dated retained earnings of the Groupamounted to EUR 399,601,000 andincluded distributable funds total-ling EUR 303,884,000. The ParentCompany’s net profit for the finan-cial year amounted to EUR123,831,014.90 and the retainedearnings to EUR 257,924,326.61.The distributable funds of theParent Company on 31 December1999 amounted to EUR381,755,341.51. The number ofshares entitled to a dividend is54,200,246. The Board of Directorsproposes, that

1) A dividend of EUR 0.50 (approx.FIM 2.97) per share be paid i.e.totally EUR 27,100,123.00.

2) An extra dividend having thevalue of EUR 2.35 (approx. FIM13.97) per share, totalling EUR127,370,578.10 will be distrib-uted in the form of Sanitec Cor-poration shares and cash.Thesaid value of the extra dividendrepresents the amount of divi-dend received by the recipient ofthe dividend. The proportion ofthe total dividend to be paid inshares will be determined by themarket value of the share on thedividend payment date. TheCompany will record the sharesto be distributed as a reductionof its distributable funds at thebook value of those shares.Theamount of the reduction depends

on the final number of shares tobe distributed.

The dividend will be paid in theform of Sanitec Corporation shares.However, those Metra Corporationshareholders whose holding of eitherSeries A or Series B Metra Corpora-tion shares in an individual book-entry account does not exceed 99shares on the record date for divi-dend payment shall, for the respec-tive part, receive the entire divi-dend, EUR 2.35 per share, solely incash. Those Metra Corporationshareholders whose holding of eitherSeries A or Series B shares registeredin individual book-entry accountson the record date for dividend pay-ment equals or exceeds 100 sharesshall receive an equivalent dividendin the form of Sanitec Corporationshares. The number of shares to bedistributed as dividend will be cal-culated from the average price of theSanitec Corporation share quoted onthe Helsinki Exchanges on the divi-dend payment date. To the extentthe number of Sanitec Corporationshares to be distributed to a share-holder as dividend cannot be dividedas whole shares into the total valueof the dividend, the remainder willbe paid in cash. Such remainderswill be calculated separately byshare series for each book-entry ac-count.

The proposal complies with theterms of the convertible subordi-nated debentures.

Helsinki, 15 February 2000

Robert G. Ehrnrooth Vesa Vainio

Göran J. Ehrnrooth Carl-Olaf Homén Jaakko Iloniemi

Paavo Pitkänen Christoffer Taxell

Georg EhrnroothPresident and CEO

38 METRA 199938 METRA 1999

Auditors´ Report

To the shareholders of MetraCorporationWe have audited the accountingrecords and the financial state-ments, as well as the administrationby the Board of Directors and thePresident of Metra Corporation forthe year ended 31 December 1999.The annual accounts prepared bythe Board of Directors and the Presi-dent include the report of the Boardof Directors, consolidated and par-ent company income statements,balance sheets, cash flow statementsand notes to the financial state-ments. Based on our audit we ex-press an opinion on these financialstatements and the Parent Compa-ny’s administration.

We have conducted our audit inaccordance with Finnish GenerallyAccepted Auditing Standards. Thosestandards require that we plan andperform the audit in order to obtainreasonable assurance about whetherthe financial statements are free ofmaterial misstatement. An auditincludes examining, on a test basis,evidence supporting the amountsand disclosures in the financialstatements, assessing the account-ing principles used and significantestimates made by the management,

as well as evaluating the overall fi-nancial statement presentation. Thepurpose of our audit of the adminis-tration has been to examine that theBoard of Directors and the Presidenthave complied with the rules of theFinnish Companies Act.

In our opinion, the financialstatements have been prepared inaccordance with the Finnish Ac-counting Act and other rules andregulations governing the prepara-tion of financial statements in Fin-land. The financial statements givea true and fair view, as defined inthe Accounting Act, of both the con-solidated and parent company resultof operations, as well as of the finan-cial position. The financial state-ments can be adopted and the mem-bers of the Board of Directors andthe President of the ParentCompany can be discharged fromliability for the period audited by us.The proposal made by the Board ofDirectors on how to deal with theretained earnings is in compliancewith the Finnish Companies Act.

Helsinki, 17 February 2000

KPMG WIDERI OY AB

Eric HaglundAuthorized Public Accountant

METRA 1999 39

Calculation of Financial Ratios

Return on investment (ROI)

Profit before extraordinary items + interest and other financial expenses

Balance sheet total - non-interest-bearing liabilities - provisions, average over the year

Return on equity (ROE)

Profit before extraordinary items - taxes for the financial year

Shareholders’ equity + minority interests, average over the year

Interest coverage

Profit before extraordinary items + depreciation + interest and other financial expenses

Interest and other financial expenses

Solvency ratio1

Shareholders’ equity + minority interests

Balance sheet total - advances received

Net Gearing 2

Interest bearing liabilities - cash and bank balances

Shareholders’ equity + minority interests

Earnings per share (EPS)

Profit before extraordinary items - income taxes - minority interests

Adjusted number of shares over the financial year

Equity per share

Shareholders’ equity

Adjusted number of shares at the end of the financial year

Dividend per share

Dividends paid for the financial year

Adjusted number of shares at the end of the financial year

Payout ratio

Dividend per share


Effective dividend yield

Dividend per share

Adjusted share price at the end of the financial year

Price/earnings (P/E)

Adjusted share price at the end of the financial year


1 Solvency ratio 2, shareholders’ equity includes subordinated debentures (EUR 117.2 mill.)2 Net gearing 2, shareholders’ equity includes subordinated debentures (EUR 117.2 mill.)

x 100

x 100

x 100

x 100

x 100

40 METRA 1999

Financial Risk Management

Metra’s Treasury function has twomain objectives. It arranges adequatefunding of the Group’s underlying op-erations on competitive terms usingdebt and equity financing instru-ments. Treasury also hedges theGroup and various companies againstunfavourable changes in the financialmarkets and minimizes the impact offoreign exchange, interest rate, creditand liquidity risks on the Group’scash reserves, profits and sharehold-ers’ equity.

The risk policy set by the Board ofDirectors defines the goals, responsi-bilities and limits of the company’sfinancing and risk management ac-tivities. Treasury employs only suchinstruments whose market value andrisk profile can be reliably monitored.

Funding and financial risk man-agement in Sanitec became thisgroup’s exclusive responsibility afterit was listed on the HelsinkiExchanges. Metra and Sanitec haveno significant mutual debts, guaran-tees or other liabilities.

Funding in Wärtsilä NSD is han-dled in cooperation with Metra and ismainly underwritten by Metra.Wärtsilä NSD’s Treasury Departmentis responsible for day-to-day riskmanagement.

Foreign exchange riskRoughly 95% of Metra’s net sales and55% of its production volume are de-rived outside Finland. Some 44% ofsales and 61% of operating costs tookplace in euro. Adoption of the euro atthe beginning of 1999 has substan-tially eased management of theGroup’s foreign exchange exposureand reduced its hedging costs.

The Group’s profits and competi-tiveness are also indirectly affected bythe domestic currencies of its maincompetitors: the USD, GBP and euro.Foreign exchange risks are monitoredfor each Group company separately.

Significant commercial currency sur-pluses and deficits, like fixed pur-chase and sales contracts, are hedged.Hedgings are made up to such timeperiods that both the prices and costscan be adjusted to the new exchangerates. These periods vary amongGroup companies from one month totwo years. The Group also hedges thebalance sheet position of its foreignexchange reserves, which include re-ceivables and payables denominatedin foreign currencies.

The instruments, and their nomi-nal values, used to hedge the Group’sforeign exchange exposure are listedin the notes to the financial state-ments, page 33. At the end of 1999the net asset value of Metra’s foreignsubsidiaries outside the euro area to-talled EUR 292 million, of whichEUR 260 million was hedged. Thetranslation difference arising fromconsolidation of the foreign subsidiar-ies in 1999 amounted to EUR 15.8million. The corresponding exchangerate difference from hedging was EUR12.2 million, which has been takendirectly to shareholders’ equity in theconsolidated financial statements.

Interest rate riskThe interest rate risk represents pri-marily changes in market interestrates on the loan portfolio. Metraspreads its interest rate risk exposureby taking both fixed and floating rateloans. The share of floating rate loansas a proportion of the total debt canvary between 30-70%. At the end of1999 the ratio was 40% after adjust-ment for interest rate swaps.

The average interest rate on inter-est-bearing debt was 5.0% at the endof 1999. The short-term (maturityless than 1 year) portion of total inter-est-bearing loan capital was 40%. Thematurity profile, division by currencyand other information on long-termdebt is provided on page 31. The ef-

fect of a 1 percentage point parallelchange in the yield curve on the valueof the net debt portfolio, excluding theperpetual convertible of EUR 117.2million, would increase the total inter-est exposure by EUR 14 million.

Liquidity riskMetra Group’s liquidity is good. Tomaintain financial latitude, Metra hadEUR 320 million in non-utilized com-mitted credit lines and substantialcommercial paper programmes. Fur-thermore, the Sanitec Group signed aEUR 160 million committed credit linein the spring to safeguard its own fi-nancial position.

Credit riskThe management of credit risks associ-ated with ordinary commercial activi-ties is the responsibility of the Groupcompanies.

Credit risks related to major busi-ness transactions are minimized byspreading these risks between banks,insurance companies, export credit or-ganizations and suppliers.

Credit risks related to the place-ment of liquid funds and to trading infinancial instruments are minimizedby setting explicit lines for thecounterparties and by making agree-ments only with the most reputabledomestic and international banks andfinancial institutions.

CURRENCY DISTRIBUTION 1999Invoiced Operating

sales costs

EUR area 43.7% 60.6%USD 30.2% 16.4%SEK 4.9% 5.3%NOK 4.7% 3.6%Other EU 5.6% 0.6%Other 10.9% 13.5%

100.0% 100.0%

The distribution of the Group´s salesand operating costs by currency pro-vide a view of the Group´s long-termcurrency sensitivity.

METRA 1999 41

Wärtsilä NSD offers shipyards and

shipowners complete propulsion

systems.WÄRTSILÄ NSDPower PlantsWärtsilä NSD’s power plants basedon diesel and gas engines offer theadvantages of flexible, rapid imple-mentation from order to startup, andhigh output efficiency. Wärtsilä’spower plants are modular in design,which enables them to be rapidlyconstructed and also expanded later,if desired. Short construction timesreduce the related capital.

Wärtsilä power plants are desig-ned to run on a variety of fuels fromheavy fuel oil (HFO) to gas, with theoption to change from one to theother as required. Natural gas isemerging as an important fuel forboth operational and environmentalreasons. The company is also con-ducting tests with new types of fuel.In areas where gas is not availableoil-fired power plants are the appro-priate solution since diesel engineshave a high efficiency while theyproduce low emissions.

Wärtsilä power plants can also beused for decentralized power genera-tion by municipalities. This bringsthe power plants close to the energyconsumer and reduces transmissioncosts. Cogeneration, or combinedheat and power generation, can in-crease a power plant’s overall effi-ciency to approx. 90%. High effi-ciency is also an effective means ofreducing carbon dioxide emissions.Power plants delivered to industryensure an uninterrupted supply ofenergy especially in areas sufferingfrom power shortages.

Marine enginesIn the marine engine marketWärtsilä NSD offers complete pro-pulsion systems and engine roomsolutions for shipyards and shipown-ers. These comprise main and auxil-iary engines, generator sets, gearboxes, ship’s propellers, training,

Business Environment

spare parts and maintenance serv-ices.

Wärtsilä NSD´s strength is itscomprehensive range of technicallyadvanced, reliable and economicalmarine engines backed by its ownglobal sales and service network.

SERVICEWärtsilä NSD’s Service activity isbased on the company’s global in-stalled engine base. The companysupports the business operations ofits customers throughout the life-cycle of its products. It also offersoperations, maintenance and reha-bilitation services in addition to ba-sic after-sales service.

The increasingly large enginebase, coupled with growth based onlong-term contracts, will increasethe share of the stable service busi-ness in Wärtsilä NSD’s total netsales.

Changes in the business environ-mentDepletion of the world’s oil and gasreserves is often mentioned as along-term risk in sectors dependenton these fuels. Current knowledgeand analyses, however, suggest thatfossil fuels will continue to play acentral role in power generation for along time to come.

Various countries support alter-native forms of energy based on reus-able reserves and their significance isgrowing. This trend may have someeffect on the markets of diesel and

gas engine technologies in powerplant applications. On the other hand,interesting opportunities also existfor combining these forms of energywith reciprocating engine technologyinto new power generation solutions.

Current business conditions arecreating excess manufacturing capac-ity for power generation equipment,which is reducing price levels. Forthis reason Wärtsilä NSD is taking itsown measures to ensure that costsand excess capacity are reduced.

Environmental legislation affectsWärtsilä NSD’s operations throughstricter national and internationalregulations governing marine trafficand power generation. The company’stechnology investments have beenfocused, therefore, ondeveloping itsproducts to ensure that they meet thestrictest environmental standards.

The crises in the Asian economiesand its effects elsewhere have clearlyaffected Wärtsilä NSD’s power plantand service markets. Wärtsilä NSD’swide marketing and service networkin more than 50 countries has never-theless managed to shift the focus ofoperations to other markets, which isoffsetting the impact of this disrup-tion.

IMATRA STEELImatra Steel’s strengths are its long-standing customer relationships andrecognized position as a supplier tothe European automotive and me-chanical engineering industries. Cus-

42 METRA 1999

tomer satisfaction surveys indicatethat Imatra Steel is a manufacturerof high-quality products and a reli-able supplier. Another key strengthis Imatra Steel´s flat, responsive or-ganization with its wide base of di-rect customer contacts, and its com-petent and motivated personnel.

The delivery chain in whichImatra Steel operates is currentlyexperiencing change, its customersare consolidating and its businessglobalizing. These trends could cre-ate a need in Imatra Steel to makefurther investments.

SANITECSanitec ranks among the leading Eu-ropean bathroom products compa-nies and among the world’s foremostbathroom ceramics companies. Thefoundation for its success is stronglocal brands which are leaders intheir markets. Its network of focu-sed factories in countries with dif-ferent cost structures enable flexiblecoordination of production. Sanitec’ssubsidiary Evac is the world’s lead-ing manufacturer of vacuum sewagesystems.

Sanitec’s net sales is partlylinked to the cyclical nature of thebuilding and construction industryand general economic trends. How-ever, this risk is reduced since thesegment most affected is new build-ing whereas some 70% of the com-pany’s total sales comes from therenovation market. Moreover, Sani-tec has subsidiaries and operationsin several countries, which balancesout the effects of fluctuations in lo-cal markets.

The successful integration ofSphinx into the Sanitec group, cou-pled with Sanitec’s ability to main-tain high productivity and a com-petitive cost structure, are factors ofhigh importance to Sanitec´s posi-tive development.

ENVIRONMENTAL ISSUESWärtsilä NSDThe focus of Wärtsilä NSD’s R&Dactivities is on the environmentalimpacts of its engines and enhanc-ing their efficiency. Most of WärtsiläNSD’s engines are certified as meet-ing the environmental requirementsof the International Maritime Or-ganization (IMO). The power plantengines comply with the WorldBank’s emission limits.

Customers are showing increas-ing interest in a method developedby Wärtsilä NSD to reduce nitrogenoxide emissions by direct injectionof water into the engine cylinder.The method is now being furtherrefined for retrofitting to older en-gines.

Engine development has also re-duced the environmental loads ofWärtsilä NSD’s factories throughreduced emissions during enginetesting.

Wärtsilä NSD continued group-wide implementation of its Opera-tive Excellence System, which cov-ers management of quality, environ-mental and occupational health andsafety issues.

Wärtsilä NSD approved an envi-ronmental policy and instructionscovering the entire group. Imple-mentation of this system startedwith environmental training andinitial environmental reviews werecarried out in the major units. Theaim is to implement the new envi-ronmental management systemcomplying with the ISO 14001standard in all major units at theend of 2001.

Imatra SteelImatra Steel made further progressin development of its environmentmanagement system. The ImatraSteel Works received QS 9000 certi-fication in autumn 1999. The Imatra

Steel Works and Billnäs SpringWorks were awarded ISO 14001 en-vironment certification during theyear. The Imatra Steel Works alsosigned an agreement with Finland’sMinistry of Trade and Industry toreduce energy consumption.

SanitecSanitec’s manufacture of bathroomproducts, the raw materials and pro-duction methods used, their envi-ronmental emissions and wastetreatment, are governed by nationalenvironmental laws and regulations.Sanitec regularly monitors the im-pact of its operations and manySanitec units have received ISO14001 environmental certification.Sanitec’s target is to develop the op-erations of its production units sothat they all comply with the re-quirements of the ISO 14001 stand-ard. Evac’s vacuum systems help tosave water and reduce sewage sincethey use only small amounts of wa-ter and the waste is handled in con-trolled conditions.

THE YEAR 2000The Metra group encountered nosignificant problems in the roll-overinto the year 2000.

Business Environment

Gas power plant in Præstø Denmark

generates electricity and heat.

METRA 1999 43

Metra Group had 14,422 employeesat the beginning of the period and17,937 at the end. The number ofemployees in Wärtsilä NSD increa-sed by 745. This was mainly becauseGrandi Motori Trieste, formerly anassociated company, became a sub-sidiary during the year, which added1,289 employees to the total. Per-sonnel also increased in operationsand maintenance services.

On the other hand WärtsiläNSD’s restructuring programme ledto significant personnel reductions.The main impacts were felt in Swe-den, in the manufacturing opera-tions in Finland, in Switzerland andin the Netherlands, where personnelwas reduced by altogether approx.500. Streamlining measures in Cum-mins Wärtsilä reduced personnel bysome 250 employees in France andthe UK.

Sanitec’s personnel increased by182 during the period. The acquisi-tion of Sphinx Gustavsberg at theyear end added a further 2,660 em-ployees. Imatra Steel’s personnel de-creased by 39 people and the num-ber of employees in the parent com-pany Metra fell by 37.

Development and trainingThe third Metra Leadership pro-gramme for senior executives wascompleted during 1999, as well asthree ManTra management trainingmodules for divisional managers.Key managers from Wärtsilä NSD,Sanitec, Imatra Steel and corporatemanagement participated in thesetraining programmes. Wärtsilä NSDstarted several management trainingand leadership development pro-grammes. Management CompetencyAssessments were carried out inconjunction with these programmesand the methods were further devel-oped to take account of changingbusiness needs.

Human Resources

At the end of 1999 full responsibil-ity for management developmentand training activities was trans-ferred to the divisions as planned.The experiences gained from theGroup human resources develop-ment and training schemes will beused by the divisions and they willcontinue the development of theprogrammes. Plans for the year 2000indicate that investments in man-agement and personnel developmentand training will be continued.

Company councilsEuropean-wide co-operation withpersonnel was continued in accord-ance with the voluntary agreementsmade by Metra’s divisions in 1996.At the beginning of 1999 the agree-ments were extended virtually un-changed for a further two years, afterwhich they will continue to operateindefinitely until terminated. As inprevious years Wärtsilä NSD, Sani-tec and Imatra Steel each arrangedits own Company Council meeting,which reviewed the division’s andMetra’s business operations andprospects, as well as the views ofpersonnel representatives.

In Finland this cooperation tookthe form of a Corporate CooperationCommittee comprising manage-ment and personnel representativesof the various units and chaired byMetra’s CEO. This Committee con-vened twice.

A seminar attended by repre-sentatives of the Finnish units wasarranged with the Varma-Sampo in-surance company to support theWork Ability for Tomorrow (TYKY)effort.

PERSONNEL BY COUNTRY31 Dec. 1999 31 Dec. 1998

Finland 3,704 3,881Sweden 1,423 1,607France 1,956 1,314Germany 1,565 955Netherlands 1,453 918Poland 1,034 769Italy 2,089 764Norway 535 538Switzerland 459 513Portugal 329 340Denmark 223 211Great Britain 156 149Spain 133 111Other Europe 707 110Europe 15,766 12,180India 611 608Malaysia 378 421Singapore 137 131China, Hong Kong 105 126Other Asia 389 415Asia 1,620 1,701USA 350 354Other Americas 122 107Americas 472 461Other countries 79 80Total 17,937 14,422

Wärtsilä NSD started several

management training and leader-

ship development programmes.

44 METRA 1999

SALES BY MARKET AREA1999EUR bill.

95

Other countries

96 97 98 99

AsiaThe AmericasOther European countriesEuropean Union

2.0

1.5

1.0

0.5

0

EUR mill. 1999 19981 1997 1996 1995

Orderbook, end of period 1,314.9 1,210.2 1,177.0 791.7 824.1Orders received 1,853.7 1,870.8 2,061.6 1,309.3 1,370.1Net sales 1,896.6 1,834.6 1,898.5 1,348.2 1,163.9

of which outside Finland 96.4% 97.2% 96.3% 98.1% 97.0%Depreciation and writedowns –64.6 –64.2 –54.4 –36.3 –35.4Operating profit/loss –28.5 –108.3 –16.9 53.8 64.8Profit before extraordinary items –46.4 –129.4 –41.6 35.4 55.0ROI –0% –12% –1% 11% 19%Personnel at end of period 8,257 7,512 7,294 6,454 6,062

of which outside Finland 5,858 4,982 4,856 4,113 3,828 1 Wärtsilä NSD Italia was consolidated as an associated company in 1998 and as a subsidiary in 1999.

FIVE YEARS IN FIGURES, WÄRTSILÄ NSD

Wärtsilä NSD’s Service

business area seeks to keep

customers’ investments

productive by optimizing

their operations and product

lifecycle .

The increasing number

of power plants forms

a base for developing plant

operations services.

Royal Caribbean Cruise Line’s

Voyager of the Seas cruise ship

is powered by six Wärtsilä 46

engines.

Pure Energy gas power plants are a

growth area for Wärtsilä NSD espe-

cially in Europe and the USA. Shown

here is the Mobile Bay power plant in

Alabama, USA.

44 METRA 1999

METRA 1999 45

Wärtsilä NSD

BALANCE SHEET, WÄRTSILÄ NSDEUR mill. 1999 1998

Fixed assets 448.1 388.1Current assets Inventories 504.0 554.0 Receivables 678.7 593.9 Cash and bank balances 53.1 63.0Balance sheet total 1,683.9 1,599.0

Share capital 289.2 278.6Other shareholders’ equity –15.3 37.4Minority interests 11.9 9.7Provisions 104.5 60.1Long-term liabilities 98.1 101.1Current liabilities 1,195.5 1,112.1Balance sheet total 1,683.9 1,599.0Interest-bearing liabilities 593.8 446.6Non interest-bearing

liabilities 699.8 766.6

INCOME STATEMENT, WÄRTSILÄ NSDEUR mill. 1999 1998

Net sales 1,896.6 1,834.6Expenses –1,833.4 –1,825.5Dep. and writedowns –64.6 –64.2Share of profits/losses in

associated companies –27.1 –53.0Operating profit/loss –28.5 –108.3Fin. income and expenses –17.9 –21.1Profit before extraord. items –46.4 –129.4Extraordinary items 0.0 13.8Profit before taxes –46.4 –115.6Income taxes –15.5 5.6Minority interests –1.4 14.9Profit for the financial year –63.3 –95.1

President Ole Johansson

“Wärtsilä NSD is shifting its focus

towards supplying complete systems

and providing operations and

maintenance services.”

During 1999 the Wärtsilä NSDgroup concentrated on restructuringand raising the overall quality of itsoperations. The result improvedclearly but remained a loss. In linewith its endorsed strategy WärtsiläNSD is shifting its focus towardssupplying complete systems andproviding operations and mainte-nance services.

Sales of marine engines hitrecord levels for the second yearrunning. The Service business con-tinued to grow. Interest in WärtsiläNSD’s power plants started to riseduring the year but an increase insales was not yet evident. The year-end orderbook totalled EUR 1.3 (1.2)billion. The group supplied marineand power plant engines with an ag-gregate output of 3,663 MW (4,182).License manufacturers shipped afurther 2,615 MW (2,748) of Sulzerengines.

Net sales increased to EUR1,896.6 (1,834.6) million.

The result before extraordinaryitems was a distinct improvement,EUR –46.4 (-129.4) million, as a re-sult of the company’s determinedrestructuring actions, cost-cuttingprogramme and entry into new mar-kets. The profitability targets, how-ever, were not reached mainly be-cause of the power plant businessand the Cummins Wärtsilä jointventure. In the power plant sector,the volume gained from new mar-kets was not sufficient to compen-sate for contracted demand in thetraditional heavy fuel oil market,which led to underutilization of pro-duction capacity. Cummins Wärt-silä, which specializes in high-speedengines, recorded a heavy loss de-spite the closure of two factoriesduring the year.

The restructuring programme torationalize operations was carriedout as planned. At the end of the

year it was decided to split the op-erations of the Cummins Wärtsiläjoint venture between the two own-ers, Wärtsilä NSD and CumminsEngine Company. Each companynow concentrates on the engines inwhich they have core competency.In addition to the above mentionedmeasures taken in Cummins Wärt-silä, production was terminated inSweden and the centre of the gas en-gine business was moved to theNetherlands. The companies inSweden and Denmark were made aregional service unit under singlemanagement. Furthermore, WärtsiläNSD acquired the outstandingshares of Wärtsilä NSD Nederlandand Grandi Motori Trieste, facilitat-ing integration of these units withinthe Wärtsilä NSD organization. Re-structuring also reduced personnel,whereas employee numbers rose inoperations and maintenance serv-ices.

Another lively year for marineenginesWärtsilä NSD’s marine engine salesreached record levels for the secondyear running. Net sales increased2.8% to EUR 637.7 (620.5) million.

46 METRA 1999

MEGAWATTS DELIVERED

MW

7000

6000

5000

4000

3000

2000

1000

0

NSD ProformaLicense builtMarinePower

95 96 97 98 99

RESULT

EUR mill. %

50.0

Operating profitProfit beforeextraordinary items

95 96 97 98 99

ROI %

15

10

5

0

–5

–10

–15

–20

–25

–30

0

–50.0

–100.0

–150.0

The marine engine orderbook at theend of the year totalled EUR 678.1(591.8) million.

The volume of medium-speedand high-speed Wärtsilä engine de-liveries amounted to 2,317 MW(2,512). License manufacturers sup-plied altogether 2,615 MW (2,748) ofSulzer low-speed engines. WärtsiläNSD is the global leader in medium-speed engines with a market shareof 36% (28%). In low-speed enginesthe company ranks second with amarket share of 35% (31%)*.

Overcapacity at shipyards hasled to increasing competition alsofor special vessels, the main busi-ness of the European shipyards.However, the present order backlogat shipyards will keep capacity loadshigh in 2000-2001. A further shiftfrom west to east will be evident.

Investment was low in the off-shore segment last year. The risingprice of oil is encouraging greater oilexploration and drilling. The utiliza-tion rate of offshore equipment ishigh, which indicates an increasingneed for new drilling rigs and off-shore vessels.

Wärtsilä NSD is the marketleader in cruise ship engines. Thegroup is also very strong in Ro-Rovessels and large container ships,where the company’s market shareis above 50%. In 1999 Wärtsilä NSDsupplied more engines to these seg-ments than any year in the past.

Environmental issues are assum-ing ever increasing importance inthe marine business. Wärtsilä NSD’sengines comply with all environ-mental regulations and in this arearepresent state-of-the-art technol-ogy.

Intensifying competition on prices ischanging the shipbuilding industry.Shipyards are increasingly out-sourcing work and looking for costsavings. The engine room, a majorelement in a vessel’s overall cost,offers considerable savings potentialin this respect. By positioning itselfto offer complete ship propulsionsystems, Wärtsilä NSD is helpingshipyards to enhance their effi-ciency.

In February 2000 Wärtsilä NSDand John Crane Lips, a member ofthe British TI Group, signed a Letterof Intent covering the development,marketing and sales of total marinepower systems, which will be of-fered to shipowners and shipbuild-ers. Under the co-operation agree-ment Wärtsilä NSD will act as theprime contractor to shipyards.Wärtsilä NSD and John Crane-Lipswill continue to sell their productsseparately to customers not wishingto purchase total marine propulsionsystems.The parties have agreed tostart negotiations over the integra-tion of Wärtsilä NSD’s propeller pro-duction in Norway, into JohnCrane-Lips.

Gas power plants take greater shareThe Power Plant business generatednet sales of EUR 655.4 (722.9) mil-lion. The year-end orderbook wasEUR 460.3 (543.9) million. The de-livery volume of power plants dur-ing the year totalled 1,320 MW(1,670), which included 298 MW(302) of gas and dual-fuel powerplants and 1,022 MW (1,368) ofheavy fuel oil plants.

The Power Plant business hasundergone several major changes inrecent years. First, the crisis inSouth East Asia halted sales in thisregion. There are now signs of a re-covery in these markets but no neworders have yet been placed.

WÄRTSILÄ NSD NET SALES BYBUSINESS AREAEUR mill. 1999 1998 Change%

Power 655.4 722.9 –9.3Marine 637.7 620.5 2.8Service 589.9 466.8 26.41

Other 13.6 24.4 –44.1Total 1,896.6 1,834.61Wärtsilä NSD Italia was consolidated in 1999.

Comparable growth was 9.3%.

* Source: Diesel & Gas Turbine Worldwide, 11/99.

Statistics based on period from June 1998

to May 1999.

Wärtsilä NSD

METRA 1999 47

Wärtsilä NSD Marine Market Shares

Marine Propulsion & Auxiliary EnginesEngine Orders June ’98-May ’99Total Market 17,159 MW (19,539)

Wärtsilä NSD Fuel Breakdown 1999

Oil, Marine 64% (60%)Oil, Power 28% (33%)Gas + multifuel,Power 8% (7%)

Wärtsilä NSD 29% (25%)Other engine makers 71%

Wärtsilä NSD has gained new ordersfrom other markets, notably Europe,India and Central and SouthAmerica. A second major changewas visible in fuels. Demand for gasand dual-fuel engines is increasing,whereas the traditional heavy fuelmarket is contracting.

The overall market for diesel andgas engines over 1 MW in outputremained largely unchanged, 9,617MW (9,644). Wärtsilä NSD’s marketshare was 17% (18%)*. More orderswere placed for gas and dual-fuelpower plants and Wärtsilä NSD’sshare of this market was 20% (19%).Orders for heavy fuel power plantsdecreased while Wärtsilä NSD’smarket share in this sector remainedalmost at the previous year’s highlevel, 57% (59%).

The gas power plant markets areprimarily in Europe and the USA,both of which yielded interestingorders for Wärtsilä NSD. The firstgas compressor installations weredelivered to Germany and the USA.

The main deliveries for powerplants running on residual oil (HFO)

were made to India, and Central andSouth America. The first IPP plantsold to India has an output of 100MW.

The Power Plant Operationsbusiness received 250 MW in newcontracts. At the year end the Op-erations portfolio had contracts to-talling 990 MW of respective powerplant output.

The operations of WärtsiläPower Finance and Wärtsilä PowerDevelopment were merged to form asingle company called Wärtsilä De-velopment and Financial Services.This company develops power plantprojects and provides financial serv-ices for power plant customers.The development of operations andfinancial services is based on thegrowing population of installed en-gines and increased demand forthese services.

Number of long-term serviceagreements increasesNet sales of the Service businessrose to EUR 589.9 (466.8) million.Comparable growth was 9.3%.

WÄRTSILÄ NSD NET SALES PERSONNEL 31 DEC.1999EUR mill. 1999 1998 Change1 Change

Wärtsilä NSD Finland Oy 931.4 862.5 8.0% 2,145 –144Wärtsilä NSD Nederland B.V. 185.9 299.3 –37.9% 820 –89Wärtsilä NSD Switzerland Ltd. 206.0 172.6 18.5% 403 –77Wärtsilä NSD France S.A. 117.1 175.9 –33.4% 316 –3Wärtsilä NSD Norway A/S 110.1 136.9 –20.5% 446 –6Wärtsilä NSD Sweden AB 88.8 117.7 –24.9% 182 –191Wärtsilä NSD North America Inc. 232.5 205.7 8.2% 214 13Wärtsilä NSD Ibérica S.A. 90.9 86.3 5.4% 133 22Wärtsilä NSD India Ltd. 70.0 45.2 53.1% 599 9Wärtsilä NSD Italia S.p.A. 194.4 - - 1,395 –41Wärtsilä NSD Singapore Pte.Ltd 32.9 45.2 –29.6% 119 –11Other subsidiaries 371.4 309.3 12.6% 1,485 –83Internal sales –734.7 –622.0 18.1% - -Total 1,896.6 1,834.6 3.4% 8,257 –601Grandi Motori Trieste S.p.A.2 - 211.7 - - -Cummins Wärtsilä S.A. 159.7 149.4 6.9% 948 –250Other associated companies 11.3 8.7 30.9% 45 6Total 2,067.6 2,204.3 –6.2% 9,250 –8451 The subsidiaries´ figures have been compared in local currencies.2 The company was consolidated in 1999. Grandi Motori Trieste has changed its name in 1999 to Wärtsilä

NSD italia.

48 METRA 1999

Reciprocating Engine and Gas Turbine Orders (from June 98 to May 99)

Wärtsilä NSD 10% (11%)Gas turbines 40%Other engine makers 50%

1-60 MW Unit SizeTotal 16140 MW

Wärtsilä NSD 17% (18%)Other engine makers 83%

Reciprocating enginesTotal 9616 MW

MW

PowerMarine

100000

80000

60000

40000

20000

0

Engine installed base

Engine installed base

The market was weak in China andIndonesia due to lower utilizationrate of power plants.

Less than 50% of power capacityinstalled by Wärtsilä NSD in Eastand South East Asia was in produc-tion in 1999. Nonetheless, WärtsiläNSD succeeded in increasing thenumber of operations and mainte-nance contracts. Wärtsilä NSD con-cluded several long-term customercontracts during the year and theirshare of Service’s net sales was 10%.New service products and continu-ous improvement in customer serv-ice will further increase growth inthis segment.

The group is launching severalnew service products in 2000. Sparepart sales via the Internet is beingtested and will ensure faster re-sponse and improved service. Fur-ther development of workshop ca-pacity and capabilities will ensureglobal maintenance and parts serv-ice for all Wärtsilä and Sulzer en-gines.

Technology focuses onenvironmental issuesWärtsilä NSD continues to focus itsR&D activities on emission control

and efficiency enhancement. Mostengines received IMO (InternationalMaritime Organization) environ-mental certification. The powerplant engines comply with theWorld Bank emission requirements.

Direct Water Injection, a methoddeveloped by Wärtsilä NSD to re-duce nitrogen oxides by direct injec-tion of water into engine cylinder, isin increasing demand by customers.Wärtsilä NSD will develop themethod to be offered also as a retro-fit for older engine types.

Gas engine development wasconsolidated into the R&D unit inZwolle, the Netherlands. The gasengine portfolio is the widest on themarket.

A new low-speed engine, theSulzer RTA60C, was released on themarket.

Tests using Orimulsion® as fuelhave yielded promising results. Thetarget is to release engines using thisnew and economical type of fuelduring 2000.

Greater flexibility in manufacturingRestructuring to match capacity tochanged volumes continued in 1999.The workforces at almost all facto-ries were reduced. Flexible manufac-turing was introduced with eachspecialized factory supported byback-up factories for assembly andcomponent manufacturing. Thissmooths out volume fluctuationsamong the factories and enables bet-ter use of existing global resourceswithout major investments. Ration-alization will continue during 2000.Flexible manufacturing will betested in co-operation between thefactories and at the same time theglobal purchasing organization willbe further developed.

Wärtsilä NSD

High-speedMedium-speedLow-speed

METRA 1999 49

Wärtsilä NSD Engine Portfolio

HIGH AND MEDIUM-SPEED ENGINES, diesel

0 10 20 30 40 50

Wärtsilä 200

Wärtsilä 20

Wärtsilä 26

Wärtsilä 26X

Wärtsilä Vasa 32

Wärtsilä 32

Wärtsilä 38

Sulzer ZA 40S

Wärtsilä 46

Wärtsilä 64

OutputMW

HIGH AND MEDIUM-SPEED ENGINES, gas

0 10 20 30 40 50

Wärtsilä 220SG

Wärtsilä 28SG

Wärtsilä 32DF

Wärtsilä 32GD

Wärtsilä 34SG

Wärtsilä 46GD

Wärtsilä 50DF

LOW-SPEED ENGINES

0 10 20 30 40 50

Sulzer RT A48T-B

Sulzer RT A52U-B

Sulzer RT A58T-B

Sulzer RT A60C

Sulzer RT A62U-B

Sulzer RT A68T-B

Sulzer RT A72U-B

Sulzer RT A84T-B

Sulzer RT A48T-D

Sulzer RT A84C

Sulzer RT A96C

OutputMW

OutputMW 60

Prospects for 2000Wärtsilä NSD will seek to capitalizeon the results of its extensive re-structuring programme and strongstrategic position during the year.The solid orderbook for marine en-gines will provide a good start to theyear and demand in Wärtsilä NSD´smarket segments is expected to re-main good. The power plant busi-ness, on the other hand, is burdenedby the slow market recovery. Fur-ther investments in operations andmaintenance services will raise theproportion of this business segment.The net sales of Wärtsilä NSD is ex-pected to increase in 2000. The re-sult of operations will improve andWärtsilä NSD’s result before ex-traordinary items is forecast to enterinto profit.

50 METRA 1999

NET SALES BY MARKETSEGMENT 1999

Trucks 47.3%Cars 17.8%Engineering industries 34.9%

50 METRA 1999

Kilsta Forge began deliveries of

forgings for connecting rods.

EUR mill. 1999 1998 1997 1996 1995

Net sales 173.0 195.1 174.7 155.5 167.2of which outside Finland 84.4% 83.4% 82.8% 82.0% 80.3%

Depreciation and writedowns –12.1 –12.0 –10.7 –9.1 –7.9Operating profit/loss 10.8 20.8 20.1 17.1 29.0Profit before extraordinary items 7.1 18.6 17.0 14.3 25.5ROI 10.0% 20.4% 18.2% 16.7% 29.0%Personnel, end of period 1,235 1,274 1,176 1,113 1,188

of which outside Finland 371 390 325 313 305

FIVE YEARS IN FIGURES, IMATRA STEEL

METRA 1999 51

Demand for special engineeringsteels weakened sharply at the startof 1999, evidenced by a drop in bothdelivery volumes and prices. Truckproduction began to decline after theprevious year’s record level and thisheavily reduced the demand forforgings and springs. Streamliningaction was taken in all ImatraSteel’s units.

The market for special and auto-motive steels started to improveduring the spring, with a further re-covery noticeable during the au-tumn. Production of heavy trucksreached 1998 levels and the year’stotal production of passenger carsactually exceeded the previousyear’s volume. Demand among engi-neering companies and wholesalersfor mechanical engineering steelsrecovered much more slowly.

Highlights of 1999Imatra Steel’s net sales in 1999 to-talled EUR 173.0 (195.1) million,11% down on 1998. All units re-ported lower delivery volumes espe-cially at the start of the year. Theprofit before extraordinary itemswas EUR 7.1 (18.6) million, well be-low the level in 1998. This resultwas nonetheless satisfactory in theprevailing market conditions.

Imatra Steel’s operations weredeveloped to match the manychanges taking place in the supplychain and among its customers. Spe-cial focus was placed on developingpartnerships with customers, onraising the quality of workmanshipand products, and on the process ofcontinuous learning. The priority indevelopment projects was on infor-mation and material flows.

During the autumn the KilstaForge began deliveries of forgings forconnecting rods while the BillnäsSpring Factory started shipments ofnew-generation tubular stabilizer

Imatra Steel

bars. Agreement was reached with along-standing customer on deliveryof the first automotive componentsbased on the Imaform forging steelsdeveloped by the Imatra SteelWorks.

Customer-driven developmentprojects were once again an invest-ment priority. A new controlledcooling line for round bars wasbrought into operation at the ImatraSteel Works. A machining line formilling and balancing heavy crank-shafts was completed at the KilstaForge, while at the Billnäs SpringFactory investments in a new stabi-lizer bar hardening machine are inprogress.

Development of quality and en-vironmental management systemsmade further progress. The ImatraSteel Works was awarded QS 9000certification in autumn 1999 andboth the Imatra Steel Works andBillnäs Spring Factorygained ISO14001 environmental certificates.The Imatra Steel Works also signedan energy conservation agreementwith Finland’s Ministry of Trade andIndustry to reduce energy consump-tion.

Prospects for 2000Demand was favourable at the startof the year 2000. Market conditionsare expected to remain good at leastuntil the end of spring. A worldwide

surge in demand for scrap has raisedscrap prices, which will also driveup the steel and component costsand the need to raise prices.

Imatra Steel is expected to returnhigher net sales in 2000 and an im-proved result.

INCOME STATEMENT, IMATRA STEELEUR mill. 1999 1998

Net sales 173.0 195.1Expenses –150.1 –162.3Depr. and writedowns –12.1 –12.0Operating profit/loss 10.8 20.8Fin. income and expenses –3.6 –2.2Profit before extraord. items 7.1 18.6Extraordinary items –5.0 –14.2Profit before taxes 2.2 4.4Income taxes –1.3 –2.0Profit for the financial period 0.9 2.4

BALANCE SHEET, IMATRA STEELEUR mill. 1999 1998

Fixed assets 87.3 89.5Current assets Inventories 34.8 36.9 Receivables 32.6 30.7 Cash and bank balances 6.3 3.0Balance sheet total 161.0 160.1

Share capital 17.5 17.5Other shareholders’ equity 34.0 31.3Provisions 2.4 3.3Long-term liabilities 59.3 60.1Current liabilities 47.8 47.9Balance sheet total 161.0 160.1Interest-bearing liabilities 62.2 55.8Non interest-bearing liabilities 44.9 55.2

President Kari Tähtinen

“Imatra Steel’s operations are

developed to match the many

changes taking place in the supply

chain and among its customers.”

52 METRA 1999

NET SALES BY PRODUCTSEGMENT 1999

Bathroom ceramics 57.3%Bathtubs and showerenclosures 21.4%Vacuum toiletsystems 10.9%Other products 10.4%

Sanitec was listedon the Helsinki Exchanges.

Sanitec‘s most importantacquisition wasSphinx Gustavsberg.

FIVE YEARS IN FIGURES, SANITECEUR mill. 1999 1998 1997 1996 1995

Net sales 630.0 570.8 496.4 451.9 419.8 of which outside Finland 94.8% 94.7% 94.7% 94.8% 95.0%Depreciation and writedowns –34.4 –34.3 –29.9 –29.8 –30.8Operating profit/loss 80.6 77.4 68.8 59.3 54.5Profit before extraordinary items 71.3 65.6 62.1 53.4 44.9ROI 18.4% 24.7% 26.4% 24.6% 21.4%Personnel, end of period 8,399 5,557 4,824 4,416 4,456 of which outside Finland 8,004 5,175 4,447 4,059 4,109

52 METRA 1999

METRA 1999 53

Sanitec is one of Metra’s major hold-ings. In May 1999 Metra decided toapply for listing of Sanitec on theHelsinki Exchanges to improve thetransparency of Sanitec´s value andcreate stronger development poten-tial for Sanitec through greater inde-pendence. An Initial Public Offeringwas launched in July in conjunctionwith Sanitec’s listing, in addition towhich Metra Corporation also soldpart of its Sanitec shares. The com-bined offering was subscribed byMetra’s shareholders, institutionaland private investors, and Sanitec’spersonnel. Furthermore, Metra dis-tributed an additional dividend inthe form of Sanitec shares at the endof the year. These transactions re-duced Metra’s holding in Sanitec to64.2%. Metra intends to reduce itsholding in Sanitec to below 50% andto distribute another additional divi-dend of Sanitec shares in 2000.

Highlights of 1999Sanitec’s net sales increased 10%during 1999 to EUR 630.0 (570.8)million. Growth was particularlypronounced in Poland, France, Italyand Denmark. Sanitec posted an op-erating profit of EUR 80.6 million ( 77.4). Half of the growth in operat-ing profit was derived from acquisi-tions. Sanitec acquired the Germancompany Sanivac VakuumtechnikGmbH as well as the outstandingminority holding in Johnson Sanitecat the beginning of the year. In Sep-tember Sanitec took a majority hold-ing in the German waste manage-ment company AquaMar GmbH.The largest acquisition during theyear, however, took place in Decem-ber, when Sanitec acquired Dutchcompany N.V. Koninklijke SphinxGustavsberg for a total enterprisevalue of EUR 210 million. The EUCommission approved the acquisi-tion subject to the divestment of

Sanitec

Gustavsberg, which mainly operatesin the Nordic countries.

MarketsGrowth was modest in the Germansanitaryware market during 1999. InFrance building activity increasedtwice as much as the economy over-all and reduced VAT rates will keepthe level of renovation high for thenear future as well. In Italy fiscalincentives enjoyed by the renova-tion business resulted in furthergrowth in the bathroom market.The Polish economy developedmore slowly than in recent years butstill above the European average.The Nordic markets developed un-evenly. Especially important was thestart of recovery in the Swedish con-struction market.

Evac’s sales of vacuum toilets formarine applications continued togrow. Sales are expected to pick upin the cruise ship market in 2000.The train applications market wasstagnant but potential in the trainrenovation market is expected toincrease sales in the long term. Theaviation market declined slightly.The building market offers promis-ing potential.

Prospects for 2000The outlook for the constructionbusiness is good in Europe. In addi-

tion to organic sales growth, Sani-tec’s development will be stronglyaffected by Sphinx; Sphinx’s salesexcluding Gustavsberg will addabout EUR 200 million to Sanitec’ssales in 2000. The impact of theSphinx acquisition on earnings pershare will be positive in 2001.Sanitec’s profits are estimated to in-crease in 2000, although Sphinx willsomewhat reduce the percentage ofoperating profit to sales.

BALANCE SHEET, SANITECEUR mill. 1999 1998

Fixed assets 444.0 260.6Current assets Inventories 129.0 89.1 Receivables 207.2 125.5 Cash and bank balances 30.8 27.8Balance sheet total 811.0 503.0

Share capital 64.8 56.5Other shareholders’ equity 274.7 153.6Minority interests 4.9 9.6Provisions 58.9 31.4Long-term liabilities 131.3 40.4Current liabilities 276.5 211.5Balance sheet total 811.0 503.0Interest-bearing liabilities 223.9 121.3Non interest-b. liabilities 183.8 130.5

INCOME STATEMENT, SANITECEUR mill. 1999 1998

Net sales 630.0 570.8Expenses –514.2 –456.1Depr. and writedowns –34.4 –34.3Associated companies –0.8 –3.0Operating profit/loss 80.6 77.4Financial items –9.3 –11.8Profit before extraord. items 71.3 65.6Extraordinary items - –0.7Profit before taxes 71.3 64.9Income taxes –26.6 –26.5Minority interests –1.3 –1.4Profit for the financial year 43.4 37.0

Mr Berndt Brunow was appointed

Executive Vice President of Sanitec

Corporation in September 1999. Mr

Brunow will start as President of

Sanitec during March 2000. Mr Henrik

Eklund then steps down from the

position of President and will retire

before the end of the year 2000.

54 METRA 1999

Assa Abloy AB (publ.), listed on theStockholm Stock Exchange, is oneof Metra’s core holdings. The com-pany’s share price on 31 December1999 was 119.50 Swedish krona, giv-ing a market capitalization of EUR4,407 million for the company. AssaAbloy launched a rights issue in July1999 in which Metra subscribed for4,483,983 shares and sold subscrip-tion rights for 2.6 million shares.Metra sold a further 8 million AssaAbloy shares in November. Follow-ing these transactions Metra’s hold-

ing in the company is 21.4% (25.0%)of the share capital and 33.0%(33.5%) of the voting rights. Metra isAssa Abloy’s largest shareholder.

Assa Abloy generated net sales ofEUR 1.2 (1.0) billion in 1999. Theprofit before extraordinary items im-proved 31% to EUR 111.7 (85.2) mil-lion. Metra’s share of this result inthe 1999 income statement wasEUR 17.8 (15.5) million. Metra alsorecorded a profit of EUR 94.7 mil-lion under other operating income,comprising the profits on the Julyshare issue and sold subscriptionrights and the shares sold in Novem-ber. The market value of Metra’sholding was EUR 943 million at theend of December, 1999. The value ofthe shares in the balance sheet wasEUR 137.7 (71.7) million.

Assa Abloy, with a large numberof strong brands, is the world’s lead-ing locks and locking group. It holds7-8% of the very fragmented globalmarket. Its main markets are in theNordic countries, where it is themarket leader. Assa Abloy also

holds a strong position in Continen-tal Europe and North America. Theacquisition of a 50% stake inLockwood made Assa Abloy themarket leader also in Australia andSouth East Asia. The company alsoconsolidated its presence in electro-mechanical locks with the purchaseof effeff in Germany, the world’sleading manufacturer of electricstrikes. Assa Abloy also holds worldleadership in electronic hotel lock-ing through VingCard and Timelox.

Strategy and prospectsAssa Abloy’s strategy is to grow or-ganically in new markets and,through acquisitions, in maturemarkets. Besides Lockwood andeffeff, the most important acquisi-tions in 1999 were Stremler andFichet Serrurerie Bâtiment inFrance, and AZBE in Spain.

Assa Abloy’s market position,sector-wide growth and consolida-tion, and its own internal streamlin-ing measures will underpin strongperformance in 2000.

Organic growth and

acquisitions will

sustain Assa Abloy’s

profitable growth.

Assa Abloy

Metra Real Estate is responsible fordeveloping, selling, leasing andmaintaining Metra’s property assetsnot related to its operational activi-ties. The property market continuedto surge in 1999 in Finland. The up-

swing was especially evident inGreater Helsinki, where rents forbusiness premises increased by al-most 10%. The buoyant economicconditions also favoured Metra RealEstate.

Metra’s largest property develop-ment project is the Arabianranta artand media industry centre, market-ing of which gained pace stronglyduring the year. Metra owns 100,000floor-m2 of building rights for resi-dential and office premises on thissite.

Metra Real Estate sold propertiesand shares in housing companiesworth altogether EUR 19.9 (10.1)million, which yielded a profit of

EUR 7.1 (3.4) million. An additionalEUR 3.7 million in revaluations ofsold properties were reversed. Thesedivestments reduced rental incometo EUR 6.7 (8.2) million. However,the occupancy rate rose, standing at90% (88%) at the close of the period.The portfolio’s yield (net operatingincome / book value) remained un-changed at 8.5% (8.5%).

The book value of the propertiesat the end of the year, excluding theproperties used by Metra itself, to-talled EUR 49.8 (67.8) million.

Metra Real Estate

The Arabianranta site

in Helsinki is the most

important develop-

ment project in Metra

Real Estate’s portfolio.

It will become the

leading centre in the

Nordic countries for

education and produc-

tion in art, media and

design industry.

METRA 1999 55

BOARD OF DIRECTORS

Robert G. Ehrnrooth, Lic Sc (Econ.),Chairman, born 1939. Chairman ofthe Board of Lohja Corporation 1986- 90. Director of Oy Wärtsilä Ab1990 - 91. Chairman of the Board ofMetra Corporation since 1990. Termexpires in 2000. Member of theBoards of Finnair Oyj, Fiskars Cor-poration and Sanitec Corporation.Owns 30,412 shares in Metra.

Vesa Vainio, LLM, Deputy Chair-man, born 1942. Deputy Chairmanof MeritaNordbanken Oyj, Presidentand CEO of Merita Oyj. Member ofthe Board of Metra Corporationsince 1993. Term expires in 2002.Member of the Board of Nokia Cor-poration and UPM-Kymmene Cor-poration. Owns no shares in Metra.

Georg Ehrnrooth, M Sc (Eng.), born1940. President and CEO of MetraCorporation. Member of the Boardof Metra Corporation since 1999.Term expires 2002. Joined the com-pany in 1965. Chairman of theBoards of Assa Abloy AB and SanitecCorporation, member of the Boardsof Sampo Insurance Company plcand Sandvik AB, member of the Su-pervisory Board of Rautaruukki Oyj.Owns 22,940 shares in Metra.

Göran J. Ehrnrooth, M Sc (Econ.),born 1934. Chairman of the Board ofFiskars Corporation. Member of theBoard of Metra Corporation since1992. Term expires in 2002. Memberof the Board of Assa Abloy AB andSupervisory Board of RautaruukkiCorporation. Owns 26,528 shares inMetra.

Corporate Board and Management

Carl-Olaf Homén, LLM, born 1936.Deputy member of the Board of OyWärtsilä Ab 1987 - 90, member ofthe Board 1990 - 91. Member of theBoard of Lohja Corporation 1989 - 90and Metra Corporation since 1990.Term expires in 2000. Chairman ofthe Supervisory Board of Aktia Sav-ings Bank plc, member of the Super-visory Board of HPY Holding Oyj,member of the Boards of HackmanOyj Abp and Kyro Corporation.Owns 1,202 Metra shares.

Jaakko Iloniemi, M Sc (Pol. Sc.),born 1932. Member of the Board ofMetra Corporation since 1994. Termexpires in 2000. Member of the Su-pervisory Board of Mandatum Bankplc. Owns no shares in Metra.

Paavo Pitkänen, MA, born 1942.Managing Director of Varma-SampoMutual Pension Insurance Com-pany. Member of the Board of MetraCorporation since 1995. Term ex-pires in 2001. Member of the Boardsof Stora Enso Oyj, Sampo InsuranceCompany plc and Partek Corpora-tion, member of the SupervisoryBoards of Alma Media Corporation,and Kesko Oyj. Owns no shares inMetra.

Christoffer Taxell, LLM, born 1948.President and CEO and member ofthe Board of Partek Corporation.Member of the Board of Metra Cor-poration since 1996. Term expires in2002. Chairman of the Board ofKalmar Industries AB. Member ofthe Boards of KCI Konecranes Inter-national Oyj Abp, Stockmann plcand Sampo Insurance Company plc.Owns 700 shares in Metra.

Front row, from left: Vesa Vainio, Robert G. Ehrnrooth ja Jaakko Iloniemi. Back row,from left: Christoffer Taxell, Carl-Olaf Homén, Göran J. Ehrnrooth, Paavo Pitkänen

and Georg Ehrnrooth.

56 METRA 1999

CORPORATE MANAGEMENT

Georg Ehrnrooth, President andCEO.

Heikki Allonen, M Sc (Eng.), born1954. Senior Vice President, Corpo-rate Planning. Joined the companyin 1979. Member of the Board of Po-lar Corporation. Owns 1,886 sharesin Metra.

Henrik Eklund, M Sc (Eng.), born1939. President of Sanitec Corpora-tion. Joined the company in 1968.Member of the Board of SaunatecPlc. Owns 226 shares in Metra.

Ole Johansson, M Sc (Econ.), born1951. President of Wärtsilä NSDCorporation. Worked for the com-pany 1975 - 79 and rejoined in 1981.Owns 9,500 shares in Metra.

Pekka Virtanen, LLM, born 1941.Senior Vice President, Administra-tion, Company Secretary. Joined thecompany in 1970. Owns 4,758shares in Metra.

INFORMATION ON THE BOARD’SACTIVITIESThe principles applied by the Boardof Directors in its work are specifiedin the rules of procedure approvedby the Board. These rules also definethe main tasks and operating princi-ples to be adopted by the commit-tees appointed by the Board. Thecommittees do not have the author-ity to make decisions; their purposeis to prepare matters for considera-tion by the Board at its meetings.

The Board of Directors convenedfourteen times during 1999. TheChairman was Mr Robert G.Ehrnrooth and the Deputy Chair-man was Mr Vesa Vainio. The Boardappointed three committees, as in

previous years: a Planning Commit-tee for strategic planning, an AuditCommittee to supervise the annualaccounts and financial control, and aPersonnel Administration Commit-tee to oversee remuneration, pen-sions and other matters related tothe company’s human resources.

The Audit Committee com-prised Mr Robert G. Ehrnrooth(chairman), Mr Göran J. Ehrnroothand Mr Paavo Pitkänen and the pre-senting officer was Mr GeorgEhrnrooth.

Corporate Board and Management

METRA 1999 57

5 Jan. 19 March 25 March 31 March 3 June 2 July 16 Dec.1 Dec.

5 January 1999EVAC ACQUIRES GERMAN SANIVACSanitec’s subsidiary Evac International is ac-quiring 100% of the shares of Sanivac GmbH.

14 January 1999METRA’S 1998 RESULT WILL REMAINBELOW PREVIOUS YEAR’S LEVELWärtsilä NSD has decided to increase its rest-ructuring provision, tighten the criteria forvaluating uncompleted power plant projects,and make further writedowns in receivablesand inventories. Owing to Wärtsilä NSD’sweaker result, Metra’s 98 result after net fi-nancial items will not reach the previousyear’s level. Sanitec and Imatra Steel bothcontinue to perform well.

4 February 1999MANAGEMENT CHANGES IN WÄRTSILÄ NSDMr Matti Mikkonen, M. Sc. (Eng.) has beenappointed President of Wärtsilä NSD Neder-land BV, Holland, Zwolle, as from 1 April1999.

18 February 1999FINANCIAL STATEMENT BULLETINMetra’s net profit MFIM 267, Wärtsilä NSDposts heavy loss, Sanitec and Imatra Steelrecord good profits.

Metra Group’s net sales in 1998 remainedon previous year’s level, totalling FIM 15.5(15.3) billion. The profit before extraordinaryitems decreased to FIM 267 (394) million. Me-tra’s result was weakened by Wärtsilä NSDäsheavy loss. Sanitec and Imatra Steel both re-corded good results. The Board will proposea dividend of FIM 2.20 (2.75) per share to theAGM.

19 March 1999GRANDI MOTORI TRIESTE TRANSFERREDTO WÄRTSILÄ NSDMetra Corporation, Wärtsilä NSD Corpora-tion and Fincantieri Cantieri Navali ItalianiS.p.A. have reached agreement on the trans-fer to Wärtsilä NSD of Fincantieri’s 60% hold-ing in Grandi Motori Trieste (GMT). TheGMT shares will be contributed in exchangefor shares in Wärtsilä NSD. This will increaseFincantieri’s holding in Wärtsilä NSD fromthe existing 12.2% to 15.4% in accordancewith the previously agreed plan. After thetransaction GMT will become a whollyowned subsidiary of Wärtsilä NSD.

25 March 1999METRA’S ANNUAL GENERAL MEETING25 MARCH 1999Metra’s Annual General Meeting approvedthe financial statements and discharged themembers of the Board of Directors and the

Metra’s Main Releases 1999 in Brief

President and CEO from liability for 1998.The dividend was decided to FIM 2.20 pershare (1997: 2.75). The AGM decided theCompany’s share capital to be stated in euroand the nominal value of the shares be EUR3.50 per share.

31 March 1999SANITEC ACQUIRES THE WHOLE OWNERSHIPOF JOHNSON SANITEC’S OPERATIONS IN SIN-GAPORE AND MALAYSIASanitec, a subgroup of the Finnish MetraCorporation, acquires the outstanding 40%of the shares of Johnson Sanitec from the co-owner in the joint-venture.

10 May 1999WÄRTSILÄ NSD ACQUIRES REMAINING 40PERCENT OF WÄRTSILÄ NSD NEDERLANDMetra’s subgroup Wärtsilä NSD Corporationwill increase its holding in Wärtsilä NSDNederland BV from the original 60% that wasacquired in 1989 to 100%. The other share-holder has been Stork NV.

17 May 1999METRA TO APPLY FOR LISTING OF SANITECGROUP ON HELSINKI EXCHANGESMetra has decided to undertake preparationsfor listing of the shares of its bathroom ce-ramics company Sanitec Ltd Oy on the MainList of the Helsinki Exchanges.

3 June 1999SANITEC MAKES A PUBLIC OFFERFOR SPHINX GUSTAVSBERGSanitec Ltd Oy and N.V. Koninklijke SphinxGustavsberg announce their intention tomerge to create a strong, focused bathroomproducts group. The merged group will be aprofitable, leading player in the Europeanbathroom products market.

7 June 1999SANITEC’S NEW ARTICLES OF ASSOCIATIONREGISTEREDThe company has been changed to become apublic limited company called Sanitec OyjAbp in Finnish and Swedish, Sanitec Corpo-ration in English. The company’s shares havebeen administered within the book-entry sys-tem since 1 June 1999. The company’s sharecapital was restated in euro and totals56,511,143,29 euro.

8 June 1999BERNDT BRUNOW APPOINTED SANITEC’SEXECUTIVE VICE PRESIDENTMr Berndt Brunow, B Sc (Econ.), has been ap-pointed Executive Vice President of SanitecCorporation as from 1 September 1999.

15 June 1999SANITEC’S COMBINED OFFERINGCOMMENCES ON JUNE 21, 1999The Extraordinary General Meeting ofSanitec Corporation and the Board of Direc-tors of Metra Corporation, the parent com-pany holding the whole share capital inSanitec Corporation, on 15 June 1999 decidedto consummate a primary offering and sec-ondary offering of Sanitec shares from June21, 1999 through July 1, 1999.

16 June 1999METRA’SINTERIM REPORTJANUARY-APRIL 1999Metra Group’s net sales increased to EUR884.8 (719.2 in 1998) million between Janu-ary and April 1999. Metra’s profit before ex-traordinary items improved clearly, totallingEUR 20.3 (-14.5) million.

2 July 1999METRA CORPORATION SUBSCRIBEDASSA ABLOY SHARES IN THE RIGHTS ISSUEMetra Corporation has subscribed 921,890series A shares and 3,562,093 series B sharestotalling 4,483,983 shares in the rights issueof Assa Abloy AB (publ.). The total subscrip-tion price was SEK 313,878,810 equalling toEUR 35,9 million (FIM 213.5 million). MetraCorporation has additionally sold its subscrip-tion rights to 2.6 million series B shares ofAssa Abloy. The net gain from this transac-tion is approx. EUR 5,9 million (FIM 35 mill.).

After the rights issue Metra’s holding inAssa Abloy’s stock is 24,0% and share ofvotes is 34,7%.

THE OFFER PERIOD OF SANITEC CORPORA-TION’S COMBINED OFFERING HAS ENDED.THE OFFER PRICE IS EUR 11.00 PER SHAREThe final offer price of the shares offered inthe Combined Offering of Sanitec is EUR11.00 per share. The initial offer price rangewas EUR 9.50 – 11.00 per share. The offerprice in the Employee Offering is 10% loweri.e. EUR 9.90 per share.

5 July 1999SANITEC’S EXTRAORDINARYSHAREHOLDERS’ MEETINGSanitec’s Extraordinary Shareholders’ Meet-ing decided on 5 July 1999 about the changesin the members of Board of Directors ofSanitec Corporation to take effect on 8 July1999. The number of directors was confirmedto seven. The period of office for the newBoard will continue until the end of the An-nual General Meeting to be held in the springof 2000.

As a result of the offers made to institu-tional and retail investors and Sanitec em-

58 METRA 1999

ployees in the Combined Offering the Extra-ordinary General Meeting of Sanitec decidedon July 5, 1999 to increase the share capitalof Sanitec by totally EUR 8.351,206.27 byissuing 8,009,582 new shares with an approxi-mate counter book value of EUR 1.04 pershare. The fully paid up share capital ofSanitec will be EUR 64,862,349.56 dividedinto 62,209,014 shares.

9 July 1999METRA CORPORATION SELLS 1,500,000SHARES IN ACCORDANCE WITH THEOVER-ALLOTMENT OPTIONThe managers of the Combined Offering ofSanitec shares have informed Metra that theywill exercise in full the over-allotment op-tion to purchase 1,500,000 shares.

Following the exercise of the over-allot-ment option, Metra has sold in the CombinedOffering altogether 9,242,776 shares in Sani-tec and its shareholding in Sanitec is 72.3%.

4 August 1999THE EUROPEAN COMMISSION MAKES FUR-THER INVESTIGATION OF SANITECS PUBLICOFFER FOR SPHINX GUSTAVSBERGThe European Commission has examined thenotification of the public offer of SanitecCorporation for all outstanding shares anddepository receipts of shares in N.V. Konink-lijke Sphinx Gustavsberg. The preliminaryfinding of the Commission is that the pro-posed transaction could result in a dominantposition in some product markets. The Com-mission has therefore decided to initiate pro-ceedings for further investigation.

9 August 1999EXTENSION OF THE PERIOD OF SANITEC’SPUBLIC OFFER FOR SPHINX GUSTAVSBERGThe period of Sanitec Corporation’s publicoffer is extended from August 10, 1999 untilDecember 6, 1999. The extension is due tothe detailed investigation of the merger bythe European Commission announced onAugust 4, 1999.

31 August 1999MR PEKKA AHLQVIST APPOINTED PRESIDENTOF WÄRTSILÄ NSD FINLAND OYMr Pekka Ahlqvist, M Sc (Eng.), MBA, hasbeen appointed President of Wärtsilä NSDFinland Oy as from October 11,1999.

13 October 1999SANITEC’S JANUARY-AUGUST 1999 OPERAT-ING PROFIT AT THE LEVEL OF THE CORRE-SPONDING PERIOD LAST YEARSanitec’s net sales during January-August to-talled EUR 411.0 (374.2) million, represent-ing growth of 9.8%. The operating profit re-mained at the level of the previous year’seight months, EUR 50.4 (50.7) million, or12.3% (13.5%) of net sales. Sanitec posted aprofit before extraordinary items of EUR 43.8(43.3) mill. and a profit after taxes and mino-rity interest of EUR 25.9 (23.2) million.

14 October 1999METRA’S BOARD TO PROPOSE ADDITIONALDIVIDEND PAID IN SANITEC SHARESMetra’s Board of Directors will propose to anextraordinary general meeting the paymentof an additional dividend on the financial yearended 31 December 1998.

METRA INTERIM REPORT JANUARY-AUGUST 99Metra Group’s net sales rose to EUR 1,716.6mill. between January and August 1999 (EUR1,669.7). The result showed positive devel-opment and the operating profit was EUR 0.3(-51.4) million. Metra’s profit before extraor-dinary items improved clearly and totalledEUR 156.3 (69.9) mill.

11 November 1999METRA SELLS ASSA ABLOY SHARES FORMEUR 89.7Metra Corporation sold 8 million Series Bshares of Assa Abloy AB (publ.) on the Stock-holm Stock Exchange on 11 November 1999for 776 million Swedish krona (EUR 89.7million). The shares sold totalled 2.5% ofAssa Abloy’s stock. Metra will record a profitof approximately EUR 73 million on this sale.Following the transaction Metra holds10,140,794 Series A shares and 57,183,029Series B shares.

23 November 1999METRA WILL DISTRIBUTE AN ADDITIONALDIVIDEND OF 1.18 EURO PER SHARE PAIDMAINLY IN SANITEC SHARESMetra’s extraordinary general meeting heldon November 23, 1999, decided according tothe Board’s proposal on payment of an addi-tional dividend on the financial year ended31 December 1998. This dividend will be paidto Metra shareholders principally in the formof Sanitec shares. The dividend is EUR 1.18(FIM 7.02) per share and total EUR63,955,329.76.

1 December 1999SANITEC’S PUBLIC OFFER FOR SPHINX GUS-TAVSBERG CLEARED BY THE EUROPEANCOMMISSIONThe Commission has approved the mergerbetween Sanitec Corporation and N.V.Koninklijke Sphinx Gustavsberg after an in-depth investigation of the European bathroomproduct market. The merger was cleared fol-lowing the commitment by Sanitec to divestthe Gustavsberg business, which eliminatedthe competitive concerns of the Commission.

7 December 1999SANITEC WILL ACQUIRE SPHINX GUSTAVSBERGN.V. Koninklijke Sphinx Gustavsberg will beacquired by Sanitec Corporation. Almost allshareholders accepted the public offer ofSanitec. The offer period of Sanitec’s publicoffer ended on December 6, 1999. Totally9,242,014 shares and depository receipts ofshares in Sphinx Gustavsberg, representing97,8% of the share capital, were submittedfor sale.

Since all conditions of the public offer havebeen fulfilled Sanitec is honouring the offer.The price 13.00 euro per share will be paidnot later than December 14, 1999.

PAYMENT OF THE EXTRAORDINARY DIVI-DEND ON 3 DECEMBER 1999Metra made the payment of the extraordinarydividend, mainly in form of Sanitec shares,on 3 December 1999. The extraordinaryshareholders meeting on 23 November 1999had accepted the dividend. The total dividendwas EUR 63.955.329,76. The average price ofthe Sanitec share on the Helsinki Exchangeswas EUR 12.68 on the payment day. Basedon this average price, the number of distrib-uted Sanitec shares was 4,990,628. Addition-ally a total of EUR 588,331.37 was distrib-uted in cash. As a consequence of the divi-dend, Metra’s ownership in Sanitec decreasedfrom 72.3% to 64.2%. Currently Metra holds39,966,028 Sanitec shares.

15 December 1999SANITEC CLOSES ACQUISITION OF DUTCHSPHINX GUSTAVSBERGSanitec Corporation has completed the ac-quisition of the shares and depository receiptsin N.V. Koninklijke Sphinx Gustavsberg fol-lowing the public offering that expired on 6December 1999. Sanitec now hold 97.8% ofthe shares in Sphinx.

16 December 1999OWNERS TO SPLIT CUMMINS WÄRTSILÄOPERATIONSThe operations of Cummins Wärtsilä, a 50/50 joint venture owned by Wärtsilä NSD andCummins Engine Company, will be dividedbetween the owners.

22 December 1999CHANGE OF METRA’S SHARE CAPITAL AS ARESULT OF SHARE SUBSCRIPTIONS BASED ONCONVERTIBLE DEBENTURESBetween 1 January and 30 November 1999altogether 407 new Series A shares and 407new Series B shares, representing loan capi-tal totalling FIM 110,000 (EUR 18,500.67) hadbeen converted based on the rights attachingto Metra’s convertible subordinated deben-tures floated in 1994.

These conversions and subscriptionshave raised Metra’s share capital by altogetherEUR 2,849.00 and the share capital now to-tals EUR 189,700,861. There are altogether54,200,246 shares divided into 13,935,104Series A shares and 40,265,142 Series B shares.This share capital increase was registered inthe Trade Register on 22 December 1999.

The new shares carry the same share-holder rights as the existing shares and theymay be traded on the Helsinki Exchangesalong with Metra’s existing Series A and Se-ries B shares with effect from 23 December1999.

Metra’s Main Releases 1999 in Brief

METRA 1999 59

Financial Analysts

ABG Securities Ltd Mr Ben Wärn +44 171 905 5600 [email protected]

Aktia Securities Mr Thomas Saarinen +358 10 247 5000 [email protected]

Alfred Berg ABN Amro Ms Tia Lehto +358 9 228 321 [email protected] Ronny Ruohomaa +44 171 678 6906 [email protected]

Aros Securities Oy Mr Johannes Schulman +358 9 173 371 [email protected]

D. Carnegie Ab, Finland Branch Mr Raoul Konnos +358 9 618 711 [email protected] Jouni Ryynänen +44 171 216 4000 [email protected]

Cazenove & Co. Mr Gorm Thomassen +44 171 588 2828 [email protected] Charles Evans Lombe +44 171 588 2828 [email protected]

Conventum Securities Ltd Mr Aarni Pursiainen +358 9 549 930 [email protected]

Crédit Agricole Indosuez Cheuvreux Mr Jan Kaijala +46 8 723 5100 [email protected] Sasu Ristimäki +46 8 723 5100 [email protected]

Credit Suisse First Boston Mr John Piedrahita +44 171 595 2000 [email protected]

Danske Securities Mr Mats Lindholm +358 9 7514 5332 [email protected]

Enskilda Securities AB Mr Johan Lindh +358 9 6162 8000 [email protected]

Evli Securities Plc Mr Pekka Spolander +358 9 476 690 [email protected]

FIM Securities Ltd Mr Jari Westerberg +358 9 613 4600 [email protected]

Goldman Sachs International Mr Colin Gibson +44 171 774 6504 [email protected] Johan Trocmé +44 171 774 1515 [email protected]

Handelsbanken Markets Mr Markus Larsson +358 10 444 2409 [email protected]

HSBC Mr Roderick Bridge +44 171 621 0011 [email protected]

Lehman Brothers Mr Peter Lawrence +44 171 256 4706 [email protected] Mark Dichlian +44 171 256 4684 [email protected]

Leonia Bank plc Ms Eeva Mäkelä +358 20 42 511 [email protected]

Mandatum Stockbrokers Ltd Mr Erkki Vesola +358 9 166 721 [email protected]

Merita Securities Ltd Mr Jari Koskela +358 9 12 341 [email protected]

Morgan Stanley Mr Gideon Franklin +44 171 513 6649 [email protected]

Opstock Ltd Mr Jarkko Nikkanen +358 9 40 465 [email protected]

Paribas Ms Liz Mitchell +44 171 595 3685 [email protected]

Swedbank Markets Mr Patric Naeslund +46 8 5859 0000 [email protected]

Warburg Dillon Read Mr Anders Fagerlund +46 8 453 7330 [email protected] Patrik Sjöblom +46 8 453 7324 [email protected]

To our knowledge at least the following brokers and financial analysts havefollowed Metra’s development during the last 12 months on their own initia-tive. They have analyzed Metra Corporation and drawn up reports and com-ments and they are able to evaluate the company as an investment target.Metra takes no responsibility for the opinions expressed therein.

Metra CorporationJohn Stenbergin ranta 2P.O. Box 230FIN-00101 HelsinkiFinlandtel. + 358 9 70951fax + 358 9 762 278www.metra.fi

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Metra Annual Report 1999...METRA 1999METRA 1999 5 Highlights • Metra’s Sanitec holding to below...

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